ISTANBUL

South Korea’s Kospi index tumbled more than 12% on Wednesday, before trimming some of its losses, as Asian markets sold off sharply amid escalating conflict in the Middle East.

The Korea Exchange briefly halted trading in the benchmark Kospi, while a circuit breaker was triggered for the Kosdaq, which dropped around 13%.

The Kospi was trading about 8% lower, with major chipmakers SK Hynix and Samsung Electronics declining more than 6% and 9%, respectively.

The sell-off follows a strong rally in South Korean equities last year, when the Kospi surged over 75%, driven largely by semiconductor companies benefiting from robust demand for memory chips.

However, South Korea’s manufacturing-driven economy is highly exposed to energy costs, and rising oil prices triggered by the Middle East conflict have raised concerns about pressure on industrial and export sectors. The country’s net oil imports account for roughly 2.7% of its GDP.

Elsewhere in the region, Japan's Nikkei 225 lost 3.6% and Shanghai Composite fell 1%.

Australia’s S&P/ASX 200 fell more than 2%, Hong Kong’s Hang Seng dropped about 2.7%, and China’s CSI 300 slipped 1.6%.

Investors are also focusing on China’s major annual political gathering known as the “Two Sessions,” where policymakers are expected to outline key economic targets. Chinese Premier Li Qiang is set to present growth and policy goals when the National People’s Congress opens on Thursday.

Oil prices continued to climb as the conflict widened, with Brent crude rising 0.95% to $82.17 per barrel, amid concerns over Iran’s attempt to block the Strait of Hormuz.

A senior commander of Iran’s Revolutionary Guard said Monday that the strategic waterway had been closed, warning that any ship attempting to pass through it would be targeted.

After that, US President Donald Trump said the US could deploy naval escorts for tankers transiting the strait if needed.

In a post on Truth Social, Trump said the US would guarantee global energy flows and emphasized the country’s economic and military strength, adding that further actions could follow.

Meanwhile, precious metals also moved higher as investors sought safe-haven assets. Spot gold rose 1.64% to $5,170 per ounce, while spot silver surged nearly 3% to $84.49 per ounce.