Kamal Ghorui
The Middle East crisis has triggered a sell-off spree in Asian equities as investor sentiments are dragged down by fears of deepening energy crisis around the world. South Korea suffered the worst fall, tumbling 6% while Hang Seng Index was down over 3%.The South Korean benchmark Kospi slumped over 6% at the open, starting the session at 5,409, as risk sentiment deteriorated sharply. Around 11:10 am IST, the index was trading at 5,444.44, down 5.8% or 336 points. Meanwhile, broader indices also reflected the pressure, with the KRX TMI falling 5.79% to 3,415 and the KRX 300 dropping 5.95% to 3,633.50. The sell-off extended across segments, with the Kospi 200 declining 6.05% to 810, while the tech-heavy KOSDAQ shed over 4% to 1,106. The KOSDAQ 150 also slipped 4.98% to 1,922.Chinese and Hong Kong equities were also under pressure, heading towards their worst session in nearly a year amid rising stagflation concerns. The Shanghai Composite Index fell over 3% by midday, while Shenzhen was down 2.9%. In Hong Kong, HSI dipped 3.44% or 869 points to 24,407. Japan’s Nikkei 225 dropped more than 3% to 51,533, while Singapore’s Straits Times declined 2.20% to 4,839. Market experts attributed the sharp fall to geopolitical developments and the uncertainty surrounding energy supply chains. Ajay Bagga described the broader sentiment, saying, “Asian Markets, A Sea of Red. Asian indices are seeing one of their worst opening sessions of the year as the ’48-hour clock’ ticks toward its Monday night (GMT/EDT) expiration. The primary driver of today’s market panic is the looming deadline set by U.S. President Donald Trump.”He added, “Over the weekend, the President issued a stern 48-hour ultimatum to Tehran: fully reopen the Strait of Hormuz–currently operating at just 5% of its pre-war volume–or face the ‘obliteration’ of Iran’s power grid, starting with its largest plants.”Weak cues from the US added to the cautious mood, with Wall Street ending lower on Friday. The Dow Jones Industrial Average fell 0.96%, the S&P 500 declined 1.51%, and the Nasdaq Composite dropped 2%.Investors pulled out of sectors such as technology, travel, agriculture and consumption, fearing the impact of rising oil prices and weaker demand. In contrast, energy-linked segments, including coal, oil and electric vehicles, saw inflows as markets bet on a stronger push towards energy security.Tensions escalated further after Iran warned it would target energy and water infrastructure in neighbouring Gulf nations if US President Donald Trump followed through on threats to strike Iran’s power grid.Goldman Sachs said the outlook for oil prices and global growth will depend heavily on how long the Strait of Hormuz remains closed, noting that the situation remains highly uncertain.
