Just now, the market opened with a sharp plunge! Dropped 1,100 points!

[Intro] Both the Japanese and South Korean stock markets opened lower, with South Korea’s KOSPI falling by more than 3% and the Nikkei 225 dropping by more than 1,100 points in early trading

Just now, both Japanese and South Korean stock markets plunged together!

On March 13, South Korea’s composite index opened at 5,412.39 points, down 3.1%. As of the time this article was written, the decline still remains close to 3%.

On individual stocks, major stocks including Samsung Electronics, SK Hynix, Hyundai Motor, LG Energy Solution, and others all saw notable declines.

On the news front, data recently released by the Bank of Korea shows that, due to increasingly growing concerns about the potential risks of an artificial intelligence bubble and profit-taking, in February foreign investors’ investment in the South Korean stock market recorded the largest monthly net outflow on record.

The head of the Bank of Korea’s International Financial Trends Team said that, as investors have grown increasingly cautious about AI-related investments and because profit-taking followed the recent rise in South Korea’s stock market, stock funds recorded the largest monthly net outflow. Net inflows into bond funds increased, mainly thanks to buy-the-dip behavior driven by rising market interest rates, as well as strong investment demand—especially from the private sector.

The Nikkei 225 index opened today down 1.59%, and then the decline widened to more than 2%, with the index plunging by more than 1,100 points.

Japanese stocks in sectors such as automobiles and electronics led the declines. Kawasaki Heavy Industries, Nissan Motor, Sanko, Mazda Motor, and others were among the biggest laggards among Nikkei 225 index constituents.

In recent times, tensions in the Middle East have escalated sharply and international oil prices have risen sharply as well. Global investors have reduced risk appetite, putting selling pressure on Japan’s stock market. According to data from Japan Exchange Group, in the week starting March 2, foreign investors sold about 983.5 billion yen worth of Japanese stock index futures, resulting in a total net sell amount of about 745.7 billion yen when stock index futures and stocks are combined—reaching the highest level in four months.

Earlier reporting on the website of 《The Nikkei》 said that, as expectations for the war to end early failed to materialize, global financial markets have shown a pattern of higher oil prices accompanied by declines in both stocks and bonds. A study of 50 geopolitical events after World War II found that during periods when concerns about crude oil supply intensified, market turmoil often lasted for a prolonged time.

For Japan, which is highly dependent on imported energy, the stock market decline has been especially severe. Although other factors also affect the market during periods when geopolitical risks occur, on average, it typically takes Japan’s stock market more than 400 days to recover to the level seen before the event.

Takafumi Onodera, head of sales and trading at Mitsubishi UFJ Trust and Banking Corporation in New York, said that due to tense conditions in the Middle East leading to sustained high oil prices and high interest rates, the USD/JPY exchange rate may rise to 160 yen. Although Japan’s authorities are expected to issue verbal warnings in the 155–160 yen range, actual intervention still faces challenges because the weakness of the yen is driven by external shocks such as geopolitical risks rather than fundamentals.