Stocks in South Korea led losses among major Asian markets on Monday after the country raised its coronavirus alert to the "highest level" following a rapid spike in cases over the weekend.

The Kospi was down 3.87% to close at 2,079.04 as shares of automaker Hyundai Motor plunged 4.3% while the Kosdaq fell 4.3% to end its trading day at 639.29. The Korean won weakened to 1,219.22 per dollar following levels below 1200 seen last week.

South Korea's Korean Air Lines and Asiana Airlines also dropped 6.16% and 6.09%, respectively. Reuters reported Monday that both the South Korean airlines had announced they are suspending flights to Daegu — the country's fourth-largest city with the largest number of coronavirus cases — for the time being.

Airline stocks in the rest of the region also fell amid the contagion fears. Australia's Qantas Airways plummeted 7.53%, while Hong Kong-listed shares of China Eastern Airlines and China Southern Airlines fell 2.73% and 3.74%, respectively, in afternoon trade.

On Monday morning, the Korea Centers for Disease and Control and Prevention reported that seven people have died from COVID-19. The number of cases has risen to 161 new cases, bringing the total to 763 nationwide — the country with the most cases outside the mainland.'

Eurasia Group's Scott Seaman told CNBC on Monday that now may be a "good opportunity" for South Korea's government to increase fiscal expenditure.

"What we've seen is the Moon government in South Korea really get geared up for a big response several weeks ago, in fact, the government was already talking about really pulling out all the stops to make sure that it could contain the economic and the health impact of this," Seaman, who is Asia director at Eurasia Group, told CNBC's "Squawk Box."

"Now that we're seeing this huge spike in cases and we're getting closer to National Assembly elections on April 15th the government has an even greater incentive now to try to pump more money into the economy or otherwise … support the economy going forward," he said.

However, he said the overall effect of such a move would be unknown given that the "problem" has expanded beyond South Korea and China, where the outbreak was first reported.

Industry heavyweight Samsung Electronics announced Saturday that a coronavirus case had been confirmed at a mobile device factory complex in South Korea, resulting in the shutdown of the entire facility until Monday morning, according to Reuters. The affected factory reportedly accounts for a small portion of Samsung's total smartphone production. Samsung Electronics shares were down 4.05% on Monday.