SEOUL, March 9 (AJP) — Asian stock markets plunged Monday as fears of a prolonged blockade of the Middle East’s key oil shipping route sent crude prices above $100 a barrel, triggering a broad risk-off selloff across the region.
South Korean and Japanese shares suffered the steepest losses in early trading as the prospect of disruptions to energy supplies bound for Asia rattled investors.
The benchmark KOSPI dropped as much as 8 percent, retreating to the 5,100 level, while Japan’s Nikkei 225 fell 7.13 percent to 51,657.37. Taiwan’s TAIEX declined 5.45 percent to 31,768.90, and Hong Kong’s Hang Seng Index slipped 2.77 percent to 25,044.34.
Sell-side sidecar curbs were triggered immediately after the opening bell on both the main KOSPI and secondary KOSDAQ markets.
Geopolitical tensions escalated after U.S. President Donald Trump demanded Iran’s “unconditional surrender,” while Tehran named Mojtaba Khamenei, the son of slain supreme leader Ali Khamenei, as the country’s new leader in what analysts saw as a defiant move signaling a prolonged conflict.
The prospect of a drawn-out war pushed oil prices sharply higher.
West Texas Intermediate (WTI) crude surged more than 16 percent to $107.92 a barrel, while Brent crude climbed over 17 percent to above $108, marking the first time oil prices have exceeded the $100 threshold since July 2022 as of late Sunday trading.
The spike followed disruptions around the Strait of Hormuz, a key artery for global oil shipments, prompting oil producers to reduce output. Given South Korea’s heavy dependence on Middle Eastern energy imports, rising oil prices are expected to weigh heavily on the domestic economy.
Foreign investors sold 2.15 trillion won ($1.6 billion) worth of shares on the KOSPI, while domestic institutions dumped 1.3 trillion won. Retail investors stepped in as bargain hunters, buying 3.4 trillion won, but decliners still overwhelmed gainers 865 to 62.
Utility and fuel-importing companies were among the few survivors. POSCO International and LG International rose 11.87 percent and 7.22 percent, respectively.
The Korean won weakened sharply to 1,497.30 per dollar, compared with 1,475.7 won on Friday, approaching the psychologically critical 1,500 level for the first time since March 12, 2009, during the global financial crisis.
Panic extended to the bond market.
The three-year Korean government bond yield jumped 25 basis points to 3.477 percent, widening the spread to nearly 100 basis points above the Bank of Korea’s policy rate of 2.50 percent. The 10-year government bond yield rose 15.3 basis points to 3.769 percent in morning trading.
Leverage in the domestic stock market has reached record levels.
According to the Korea Financial Investment Association, outstanding margin loans stood at a record 33.6945 trillion won as of March 5. Margin loans refer to funds borrowed from brokerages by investors to buy stocks and typically rise when expectations for market gains increase.
DB Securities said foreign investors had largely sold Korean equities during the Iran crisis but were selectively buying construction stocks linked to the nuclear power theme.
The construction sector recorded the highest ratio of cumulative foreign net purchases relative to market capitalization during the period.
As of March 6, the ratio stood at 1.20 percent of market capitalization. Foreign investors also increased holdings in Samsung E&A (0.73 percent) and Hyundai Engineering & Construction (0.64 percent).
Analysts said the buying reflects expectations that nuclear power could emerge as an alternative energy source during periods of oil price spikes, while the AI-driven surge in electricity demand is likely to boost nuclear energy investments.
Korean companies with strengths in both nuclear and construction sectors are also seen as potential beneficiaries of future reconstruction projects in the Middle East once the conflict subsides.
Among market heavyweights, Samsung Electronics fell 9.35 percent to 170,600 won, while SK hynix dropped 11.15 percent to 821,000 won.
Defense stocks were mixed after early gains. Hanwha Aerospace declined 6.28 percent to 1,388,000 won, while Hanwha Systems rose 2.33 percent to 162,600 won, remaining one of the few gainers in an otherwise broad market decline.
LIG Nex1, the developer of the Cheongung-II missile defense system, initially rose about 4.44 percent at the open but later reversed course, falling 3.12 percent to 808,000 won.
Automakers also retreated, with Hyundai Motor sliding 10.31 percent to 496,000 won and Kia declining 8.74 percent to 152,400 won.
Battery and biotech stocks weakened as well. LG Energy Solution fell 6.23 percent to 354,000 won, while Samsung Biologics slipped 5.29 percent to 1,557,000 won.
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