By Kwanwoo Jun
South Korean shares plunged at a record pace, leading losses in Asia as the widening Middle East conflict involving the U.S., Israel and Iran entered a fifth day, prompting investors to flee equity markets and seek safer assets.
The benchmark Kospi dived 12% to close at 5093.54--its steepest-ever daily percentage drop, taking losses over the past two days to 18%.
The crash marked a stunning turn of events for one of Asia's best-performing stock markets of 2026. Before this week's selloff, the Kospi was up 48%. Its year-to-date gains now stand at 21%.
Wednesday's rout prompted the stock-market operator, Korea Exchange, to suspend trading twice--the first for five minutes, and the second for 20 minutes--to cool volatility in the Kospi and the smaller tech-heavy Kosdaq markets.
Shipping stocks were among the top decliners amid concerns about higher fuel costs and the safety of commercial vessels passing through the Strait of Hormuz. Shares of major Korean bulk carrier Pan Ocean and its leading container shipping company HMM sank 17% and 16%, respectively.
Index heavyweight Samsung Electronics and memory-chip maker SK Hynix, which had led the recent market rally, slid 12% and 9.6%, respectively.
ING economist Min Joo Kang attributed the steep declines to the significant downside risk posed by the Middle East conflict to South Korea's growth.
"As Korea depends heavily on external oil and gas, terms of trade should deteriorate with higher commodity prices," Kang said in a note. ING is maintaining its 2026 gross domestic product growth forecast of 2.2% for now, though it warned of growing downside risks.
Ma Tieying of DBS said a 10% rise in oil prices could reduce South Korea's GDP growth by 0.2-0.4 percentage point, citing its high dependence on energy imports, especially from the Middle East.
Regional markets from Japan to Taiwan, Hong Kong, Singapore and India were a similar sea of red. The Nikkei Stock Average closed 3.6% lower and China's Shanghai Composite Index ended down 1.0%. Hong Kong's Hang Seng Index was recently about 2.5% lower, Singapore's benchmark index shed 2.8% and India's Sensex lost 1.8%.
Washington earlier said joint U.S. and Israeli strikes against Iran would continue for weeks and grow in intensity, as Tehran continued to attack Gulf countries. Oil-tanker traffic through the Strait of Hormuz has come to a virtual standstill.
The Korean won weakened against the U.S. dollar on risk-off sentiment. The greenback was last at 1,476.20 won, up from 1,466.10 won in Seoul onshore trading late Tuesday.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
March 04, 2026 02:50 ET (07:50 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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