Asian stocks fall, KOSPI pulls back after reaching record highs

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Asian equities fall as Iran fired on three ships in the Strait of Hormuz, escorting two into Iranian waters.
Japanese equities fall as higher oil prices weigh, highlighting reliance on Middle East crude imports.
South Korea’s KOSPI pulls back after reaching a record high of 6,557 on Thursday.

Asian equities mostly declined as stalled US–Iran talks dampened risk appetite. The Wall Street Journal reported Iran fired on three ships in the Strait of Hormuz, escorting two into Iranian waters on Wednesday. Iranian media said the Revolutionary Guard moved the vessels to Iran, marking an escalation, though White House press secretary Karoline Leavitt said the seizures did not violate ceasefire terms.

Mohammad Bagher Ghalibaf, Iranian parliament speaker and chief negotiator, stated that reopening the strait would be “impossible” while the United States (US) and Israel persist with what he described as “flagrant” ceasefire violations, including the US naval blockade. Meanwhile, President Donald Trump said the current truce would remain in place indefinitely as Washington awaits a renewed peace proposal from Tehran.

At the time of writing, Japan’s Nikkei 225 is trading over 1% lower, near 58,900, while China’s SSE Composite Index is declining 0.79%, below 4,100. Moreover, Hong Kong’s Hang Seng Index is down 1.12% below 25,900, and South Korea’s KOSPI falls 0.61% to 6,380.

South Korea’s KOSPI retreats after hitting a record high of 6,557 on Thursday. The market had rallied on strong gains in technology stocks but lost momentum as higher energy prices and persistent Middle East uncertainty lifted Korea’s import bill.

Japanese equities decline as rising oil prices weigh on sentiment, underscoring Japan’s heavy reliance on Middle East crude imports. Traders expect the Bank of Japan (BoJ) to keep rates unchanged this month, though it may signal a potential shift toward policy normalization as early as June.

Hong Kong’s Hang Seng Index falls as investors take profits and adopt a cautious stance ahead of March inflation data due later in the day, with sentiment also influenced by a mixed global backdrop.

Asian stocks FAQs

Which are the main stock market indices in Asia?

Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.

What are the main sectors represented in Asian stock markets?

Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.

What factors drive Asian stock markets?

Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.

What are the risks of investing in Asia stock markets?

Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.