Other Asian equity markets were also hit by panic selling on Wednesday.
Hong Kong, Sydney, Singapore and Taipei all dived more than 2 per cent, while Bangkok tumbled 8 per cent to also spark a trading halt.
Shanghai, Wellington, Manila and Jakarta were also deep in negative territory.
“Investors sold down risk assets, and in particular, the Nikkei as well as the Kospi, which outperform other major indexes, have become a target of the heavier selloff as they try to book profits,” said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.
As the joint strikes on Iran moved into a fifth day, observers warned that the continued choking of crude supplies from the Middle East would continue to push prices higher and deal a blow to hopes for any more monetary easing.
US President Donald Trump pledged that if needed, the navy would escort oil tankers through the Strait of Hormuz – through which about a fifth of global oil supplies flow – and ordered Washington to provide insurance for shipping.
That provided some relief to traders and pared a rally in prices on Tuesday.
However, Iranian strikes on several neighbours threatened to broaden the conflict, while uncertainty about how long the war would go on and news that some oil fields in the region had been closed continued to put upward pressure on the commodity.
Both main oil contracts rose around 1 per cent on Wednesday.
West Texas Intermediate has soared 12 per cent to more than US$75 since last Friday, before the attacks began, while Brent is up more than 13 per cent to sit above US$82.
With some warning that they could top US$100 a barrel, equity markets are taking a pounding.
“Asian equities are now staring at a third consecutive day of losses and the reason is not mysterious,” wrote Stephen Innes at SPI Asset Management.
“When crude edges higher, the invoice lands hardest in Asia, where imported energy is not just a line item but a structural dependency.
“Export-driven economies suddenly find themselves recalculating margins with a more expensive barrel sitting quietly in the background of every factory floor and shipping lane.”
https://www.channelnewsasia.com/business/asian-markets-kospi-plunge-iran-war-middle-east-5968971
