Korea Halts Trading as Indexes Sink 10% on Crisis Shocks

Trading on major exchanges in South Korea was temporarily jolted after benchmark indexes plunged 10% in a single session, reflecting a rapid escalation of uncertainty linked to tensions in the Middle East.

Sudden Plunge Triggers Circuit Breakers

The sharp decline triggered automatic circuit breakers designed to pause trading during extreme volatility. The sudden drop came during a session marked by heavy selling across multiple sectors, including technology, manufacturing, and financial services.

The benchmark KOSPI and the tech-heavy KOSDAQ both fell sharply during morning trading in Seoul, reaching the 10% threshold that activates market-wide circuit breakers, Channel News Asia reported. 

Trading on the Korea Exchange was temporarily suspended as part of standard volatility controls intended to prevent panic-driven transactions. Japan’s stock market also saw heavy losses, with the Nikkei and Topix both down by 4%, while Hong Kong’s Hang Seng Index fell by 3%. China’s Shanghai Composite Index dropped 1.3%, and Australia’s S&P/ASX 200 declined around 2%.

Chief strategist at lwaiCosmo Securities, Kazuaki Shimada, said,

“Investors sold down risk assets, and in particular, the Nikkei as well as the Kospi, which outperform other major indexes, have become targets of the heavier selloff as they try to book profits.” 

Global Tensions Amplify Market Sensitivity

The halt in trading had immediate and broader implications. Domestically, it raised concerns about investor confidence and market stability. South Korea’s economy, which is deeply tied to global trade, is particularly sensitive to disruptions in international markets. Any disruption to these factors can quickly influence investor sentiment.

Energy markets played a central role in the day’s turmoil. A spike in crude oil prices raised concerns about higher production and transportation costs. For an economy that imports most of its energy needs, sustained increases in oil prices can weigh on corporate margins and consumer spending.

Investors appeared to respond to growing geopolitical risks, particularly fears that escalating tensions could spike crude oil prices, leading to higher production and transportation costs. In a globally interconnected economy, sustained increases in oil prices can weigh on corporate margins and consumer spending.

Thailand, another major Middle East oil importer, saw its stock exchange slide 7.8%. Bianco Researcher CEO Jim Bianco said,

“South Korea imports 94% of its oil, with 75% coming from the Middle East. So, it is easy to see why its ‘degens’ are panicking.”

Investors have grown increasingly cautious as oil prices climbed amid fears that the conflict involving Iran could disrupt global energy supplies. Brent crude traded above $82 per barrel, while the US benchmark crude rose to around $75.

Related: XRP at Risk: $650M Sell Pressure Signals Possible Drop

Crypto Researcher Warns of Rare Market Shock

Crypto researcher SungHoon Lee described the situation as a “black swan” event, saying trading in South Korea was halted because the market fell too quickly for systems to keep up. He noted that about $3.2 trillion in global stock market value has been wiped out over the past four days.

He highlighted that the situation goes beyond a typical conflict, calling it the most severe geopolitical shock since the 1973 oil crisis, which led to a prolonged market downturn for two years.

Despite the broader market decline, crypto assets have reacted less sharply. While the sector is already down 21% this year, total market value dipped only 0.5% on the day to $2.39 trillion, based on data from CoinGecko.