Korean stocks record worst day, won sinks on Iran conflict

South Korean shares sank 12% on Wednesday, posting the biggest drop in its 46-year history and ​wiping half a trillion dollars in value just this week, as fears the Iran war could cripple Asia's fourth-largest economy sent the won to ‌a 17-year low. Israeli and U.S. forces pounded targets across Iran, prompting retaliatory attacks around the Gulf as the conflict spread to Lebanon, rattled global markets and sent oil prices sharply higher. The Reuters Iran Briefing newsletter keeps you informed with the latest developments and analysis of the Iran war. Sign up here. Advertisement · Scroll to continue Losses in the country's stocks far outweighed those seen elsewhere in Asia as the Iran conflict heightened risks for economies like South Korea, which are heavily reliant on Middle Eastern oil for their energy needs. South Korea is the world's fourth-largest buyer ​of oil and around 70% of its purchases come from the Middle East. Korean equities had been Asia's best performing, having doubled over the past year, making ​them particularly vulnerable to a capitulation, traders said. The benchmark KOSPI (.KS11), opens new tab fell 698.37 points, or 12.06%, to close at 5,093.54, marking the biggest ⁠daily percentage loss in its history dating back to 1980. It lost as much as 12.65% during the session. Advertisement · Scroll to continue On the index, circuit breakers were activated for the first time since ​August 2024, halting trading for 20 minutes. A separate trading curb was previously triggered for the second day in a row to halt programme trading for five minutes but failed to ​cap the decline. The punishing selloff has wiped off 817.6 trillion won ($553.82 billion) in market capitalisation over the past two days. On Tuesday, the index fell 7.24%. The losses marked an abrupt turn for a market that had rapidly outperformed global peers on a world-beating, artificial intelligence-driven rally. "This looks more like a positioning unwind and risk reduction rather than a fundamental deterioration in earnings," said Tareck Horchani, with Maybank Securities ​in Singapore, adding that positioning had been crowded in the world's hottest market.