The Korean Stock Exchange was forced to halt trading after the escalating conflict in the Middle East led to a significant drop in stock prices on Wednesday.
Both South Korea’s KOSPI and KOSDAQ fell more than 10% during morning trading in Seoul, triggering power outages as the indexes saw their worst session since August 2024, Channel News Asia reported on Wednesday.
Japanese stock markets also saw heavy losses on Wednesday, with the Nikkei and Topix falling nearly 4%. Hong Kong’s Hang Seng Index fell 3%, and China’s Shanghai Composite Index fell 1.3%, according to Google Finance.
“Investors sold risky assets, and in particular, the Nikkei and Kospi, which outperform other major indices, became the target of greater selling as they tried to take profits,” Kazuaki Shimada, chief strategist at IwaiCosmo Securities, told CNA.
“South Korea imports 94% of its oil, and 75% of it comes from the Middle East,” said Jim Bianco, CEO of Bianco Research. “So, it’s easy to see why its ‘objects’ are panicking.”
Thailand, another major oil importer in the Middle East, saw its stock market fall 7.8% on Wednesday.
Trump says wars can be fought forever
The Trump administration said attacks on Iran are escalating, as the United States targeted a meeting of the country’s top leaders while they were deciding who would lead the country, Fox News reported Wednesday.
This step comes in the wake of the closure of the Strait of Hormuz after threats from Iran to target oil and cargo ships passing through the vital waterway.
“If necessary, the US Navy will begin escorting tankers through the Strait of Hormuz as soon as possible,” Donald Trump said on Truth Social.
He said on Tuesday that the United States has an “almost unlimited supply” of weapons and that wars can be “fought forever.”
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As a result, crude oil prices have risen dramatically, with Brent rising 14% to $82 per barrel and WTI jumping 12% to $75 per barrel since the air strikes began on February 28, according to Oil Price.com.
Cryptocurrency researcher says a black swan event is unfolding
Cryptocurrency researcher Seung Hoon Lee described it as a black swan event, explaining that trading in Korea stopped “because the collapse was too fast for the system to handle,” noting that $3.2 trillion in global stock market value had evaporated in the past four days.
“This is not just a war. This is the worst geopolitical shock since 1973,” he said, referring to the oil crisis that devastated markets for two years in the 1970s.
Crypto asset markets, which have already lost 21% so far this year, did not see a sharp reaction, with total capitalization falling just 0.5% on the day to $2.39 trillion, according to CoinGecko.
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