South Korean stocks plunged sharply as escalating conflict involving Iran shook global financial markets. The benchmark KOSPI index dropped 698.37 points, or 12.06%, to close at 5,093.54, marking the largest daily percentage decline in the market’s history dating back to 1980.

The index briefly fell as much as 12.65% during the trading session, reflecting intense selling pressure as investors reacted to geopolitical risks and rising energy prices.

Conflict in Middle East rattles global markets

The sharp market reaction came as Israeli and U.S. forces continued strikes on Iran, prompting retaliation across the Gulf region and widening fears that the conflict could destabilize energy supply routes and global trade.

Financial markets worldwide were unsettled as the escalation pushed oil prices sharply higher, increasing concerns about inflation and economic disruption across major economies.

South Korea particularly vulnerable to energy shocks

Analysts say South Korea’s heavy reliance on Middle Eastern energy supplies made its markets especially sensitive to the crisis. The country is the world’s fourth-largest oil importer, and about 70% of its oil purchases come from the Middle East, making geopolitical disruptions in the region a major risk to its economy.

As fears of prolonged conflict grew, the Korean won also fell to a 17-year low, reflecting broader concerns about economic stability and trade flows.

Circuit breakers triggered during sell-off

The market plunge forced regulators to activate circuit breakers, temporarily halting trading for 20 minutes in an attempt to slow the sell-off. Additional trading curbs were also triggered to pause program trading, though they failed to fully contain the decline.

Traders noted that Korean equities had been among Asia’s best-performing markets over the past year, with stocks doubling in value, leaving them vulnerable to a sharp correction when geopolitical tensions intensified.