[US-Iran War] Asian Markets Plunge... KOSPI -10%, Nikkei -4%

Weakness Amid Intensifying U.S.-Iran Conflict

The KOSPI index took a direct hit from Middle East geopolitical risks, including fears of a full-scale war between the US and Iran, starting with a sharp drop of over 4%. On the 4th, the index was displayed on the status board at the Hana Bank dealing room in Jung-gu, Seoul. The KOSPI index triggered a sell-sidecar for the second consecutive day. March 4, 2026. Photo by Dongjoo Yoon

As the war between the United States and Iran intensifies, on March 4, major Asian stock markets such as Korea, Japan, and Taiwan are experiencing sharp declines. The drop in the KOSPI index was particularly pronounced, as both Samsung Electronics and SK Hynix, the leading memory semiconductor stocks and the largest stocks by market capitalization on the KOSPI, fell simultaneously.

As of 1:53 p.m. on the same day, Korea's KOSPI was trading at 5,250.48, down 9.35% from the previous session. The KOSDAQ index also recorded a decline of 10.75%, falling to 1,015.35. As intraday losses widened, circuit breakers were triggered first on the KOSDAQ at 11:16 a.m. and then on the KOSPI at 11:19 a.m.

Japan's Nikkei 225 Average (Nikkei Index) was down 4.25% at 53,903.36 compared to the previous session. The TOPIX index also fell 4.02% to 3,620.40. Taiwan's TAIEX index dropped by 3.78%, while the Hang Seng Index in Hong Kong fell by 2.78%. China's CSI 300 index declined by 1.61%, and the Shanghai Composite Index was also down 1.43%.

The magnitude of the decline in major Asian stock markets was much larger than that of the U.S. stock market the previous day. Overnight, all three major New York stock indexes closed lower. The Dow Jones Industrial Average ended down 0.83% at 48,501.27. The S&P 500, which focuses on large-cap stocks, and the tech-heavy Nasdaq both closed down by 0.94% and 1.02%, respectively.

Key U.S. indexes, which had opened the previous day with losses of more than 1%, narrowed their declines after President Donald Trump stated that he would mobilize a convoy operation to escort oil tankers through the Strait of Hormuz "if necessary." The Iranian military heightened fears by warning that it would destroy all ships passing through the Strait of Hormuz. This triggered a surge in global energy prices, including West Texas Intermediate (WTI), Brent crude oil, and natural gas.

The sharp drop in the KOSPI index, even compared to other Asian markets, is mainly attributed to the steep declines in Samsung Electronics and SK Hynix, the two largest stocks on the KOSPI. According to Morningstar, the combined market capitalization of Samsung Electronics and SK Hynix accounts for nearly 50% of the entire KOSPI index.

Lorraine Tan, Head of Asia Equity Research at the U.S. investment research firm Morningstar, told U.S. business media CNBC, "The decline in the KOSPI is largely due to the concentration in specific stocks seen in the Korean stock market," adding, "The recent price drop appears to be driven by profit-taking following a strong rally, amid a risk-averse environment." She also pointed out, "At the same time, concerns that the adoption of artificial intelligence (AI) data centers may slow down are reflected in the market," explaining, "AI data centers require significantly higher energy costs compared to regular data centers."

The United States and Israel have continued their attacks for four consecutive days, having launched a surprise airstrike on Iran on February 28. In response, Iran has maintained its resolve by launching retaliatory missile and drone strikes targeting U.S. military bases in the Middle East. Amid the ongoing market downturn, stock markets in Asian countries that are highly dependent on Middle Eastern crude oil have taken a direct hit, declining for several consecutive days.

This content was produced with the assistance of AI translation services.