The benchmark KOSPI plunged 3.26% to around 3,139 on Friday, the steepest drop in nearly four months, driven by government plans to roll back tax cuts on corporate income and stock investments, compounded by pressure from the first day of tariff implementation. The proposed tax changes, outlined in the finance ministry’s annual tax code revisions, seek to reverse reductions introduced under former President Yoon Suk Yeol and are expected to raise the effective tax burden on corporations and equity investors. Adding to the downward pressure, South Korea's factory activity contracted for the sixth consecutive month in July, with the S&P Global Manufacturing PMI falling to 48.0 from 48.7 in June as both output and new orders fell at a sharper pace. On the corporate front, broad-based losses across all sectors added to the selloff, with notable drags from Poongsan Corporation (-15.36%), Doosan Enerbility (-6.25%), SK Hynix (-6.03%), and KB Financial Group (-4.06%).