 ▲ KOSPI Plunges 12% in ‘Panic Market’…Cryptocurrencies Remain Relatively Stable / ChatGPT-generated image |
The shock from the outbreak of war between the United States and Iran dealt a direct blow to the market, sending the KOSPI to its largest drop in history and pushing it below the 5,100 level.
According to investment media outlet FXStreet on March 4 (local time), escalating tensions in the Middle East rapidly fueled global risk-off sentiment, plunging the Korean stock market into panic mode. The KOSPI closed at 5,093.54, down 698.37 points (12.06%) from the previous session. This marks the steepest decline ever, surpassing the 12.02% plunge recorded on September 12, 2001, following the 9/11 attacks. The point drop also set a new one-day record.
The index opened at 5,592.59, down 199.32 points (3.44%), before selling pressure accelerated. A day earlier, the benchmark had already posted a record 452.22-point fall, only to break that record again within a single session. As both the KOSPI and KOSDAQ plunged more than 8% intraday, trading on both markets was halted for 20 minutes after circuit breakers were triggered. Sidecar measures temporarily suspending program sell orders on the KOSPI were activated for a second consecutive day, while a sell-side sidecar on the KOSDAQ was reintroduced for the first time in four months.
The KOSDAQ also recorded its largest-ever decline, tumbling 159.26 points (14.00%) to close at 978.44. The previous record drop was 11.71% on March 19, 2020. Analysts noted that with South Korea relying on imports for 94% of its crude oil—75% of which comes from the Middle East—the possibility of a closure of the Strait of Hormuz delivered a direct shock to the market.
Major Asian markets also fell in tandem. Japan’s Nikkei and Topix each dropped about 4%, Hong Kong’s Hang Seng Index fell 3%, and China’s Shanghai Composite declined 1.3%. International oil prices surged, with Brent crude jumping 14% to $82 per barrel and West Texas Intermediate (WTI) rising 12% to $75. Analysts estimate that $3.2 trillion in global market capitalization has been wiped out over the past four days.
The cryptocurrency market saw relatively limited losses. Although it has already fallen 21% this year, its total market capitalization declined just 0.5% on the day to around $2.39 trillion. As traditional financial markets suffer historic shocks, differences in volatility across asset classes are becoming increasingly pronounced.
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