South Korean shares traded 1.82 percent lower late Monday morning as investors dumped large-cap shares, spooked by heightened economic woes and growing geopolitical risk following North Korea's nuclear test.

The benchmark Korea Composite Stock Price Index (KOSPI) dipped 39.19 points to 1,998.68 as of 11:20 a.m.

Key events are ahead this week with possible US rate hike at the Federal Open Market Committee (FOMC) meeting. 

North Korea ramped up regional tensions last week by conducting its fifth nuclear test in defiance of international pressure to stop its nuclear program.

Most blue chips traded sharply lower, led by market bellwether Samsung Electronics dipping 7.05 percent. SK Innovation, the nation's largest refiner, also dropped 2.95 percent.

Auto shares also fell, with leading automaker Hyundai Motor falling 0.72 percent, and its sister company Kia Motors inching down 0.11 percent.

The local currency was changing hands at 1,110.50 won against the US dollar, down 12.10 won from the previous session's close. (Yonhap)