Korea halts trading as key indexes drop 10% on Middle East crisis

Trading on the Korean Stock Exchange was halted on Wednesday due to a significant plunge in share prices, triggered by escalating conflict in the Middle East. Both the South Korean Kospi and Kosdaq indexes fell over 10% in morning trading in Seoul, activating a circuit breaker and marking their worst session since August 2024.

Asian Markets Decline

Japan's stock markets also experienced substantial losses, with the Nikkei and Topix down nearly 4%. Hong Kong's Hang Seng Index dropped 3%, and China's Shanghai Composite saw a 1.3% decrease. According to Kazuaki Shimada, chief strategist at IwaiCosmo Securities, investors sold risk assets, with the Nikkei and Kospi, which had previously outperformed, becoming targets for profit-taking.

Jim Bianco, CEO of Bianco Research, noted South Korea's high dependence on Middle Eastern oil imports (94% of its supply, with 75% from the region), explaining the panic among its investors. Thailand, another significant oil importer from the Middle East, also saw its stock exchange slide by 7.8%.

Geopolitical Developments and Oil Prices

The Trump administration reported intensifying attacks on Iran, with the US targeting a meeting of Iranian leaders. This action follows Iran's threats to target oil and cargo ships in the Strait of Hormuz, leading to its closure. Donald Trump stated on Truth Social that the US Navy would escort tankers through the Strait of Hormuz as soon as possible. He also commented on the US having a "virtually unlimited supply" of weapons and that wars can be "fought forever."

Crude oil prices surged as a result of these developments. Brent oil increased by 14% to $82 per barrel, and WTI crude jumped 12% to $75 per barrel since airstrikes began on February 28.

Market Reactions and Crypto Landscape

Crypto researcher SungHoon Lee described the situation as a "black swan event," explaining that Korean trading was halted due to the speed of the crash. He highlighted that $3.2 trillion in global stock market value has been lost in the past four days, calling it the "WORST geopolitical shock since 1973," referencing the oil crisis of that era.

In contrast, crypto asset markets, which had already declined 21% year-to-date, showed a less dramatic reaction. The total crypto market capitalization was down only 0.5% on the day, reaching $2.39 trillion, according to CoinGecko.