Trump: "I want Iran’s oil"… KOSPI retreats to the 5,270 level on fears of a wider Middle East war

South Korea’s benchmark KOSPI tumbled nearly 3% on concerns the conflict in the Middle East could broaden, retreating to the 5,270 level.

On the 30th, the KOSPI closed at 5,277.3, down 161.57 points (2.97%) from the previous session. The index at one point slid as much as 5.29% intraday, but pared losses as institutional investors turned net buyers.

The decline was attributed to rising fears of escalation in the Middle East. Tensions in the region increased after Yemen’s Iran-backed Houthi rebels attacked Israel, and the possibility of deploying 10,000 U.S. ground troops has also been raised.

President Donald Trump said in an interview with the UK daily Financial Times (FT) that day, “I want to take Iran’s oil,” adding, “Some stupid people in the U.S. say, ‘Why would you do that?’ but they’re stupid people.”

Trump also mentioned the option of seizing Kharg Island, through which most of Iran’s oil exports pass. “We may take Kharg Island, or we may not. We have a lot of options,” he said. “But if we do, we would have to stay there for a period of time.”

Oil prices also showed an uneasy trend. According to Bloomberg, Brent crude futures for May—the international benchmark—jumped as much as 3.3% in Asian trading that day to as high as $116.50 a barrel, reflecting heightened tensions over the weekend. U.S. West Texas Intermediate (WTI) futures also rose as much as 3.4%.

Foreign investors extended their selling in local equities. In the KOSPI market, foreigners posted net sales of 2.5233 trillion won. Retail and institutional investors recorded net purchases of 1.5330 trillion won and 592.4 billion won, respectively.

Most of the KOSPI’s top market-cap names fell in tandem, except for LG Energy Solution. Samsung Electronics closed down 1.89% at 176,300 won, while SK hynix ended the session down 5.31% at 873,000 won. Hyundai Motor, Samsung Biologics, SK Square, Hanwha Aerospace and Doosan Enerbility also weakened by 2% to 5%.

Shares of aluminum-related names such as Sama Aluminum (7.28%) and Namseon Aluminum (3.36%) jumped after Iran attacked major aluminum production facilities in the Middle East.

The KOSDAQ also fell more than 3%. The index closed at 1,107.05, down 34.46 points (3.02%) from the previous session. In the KOSDAQ market, foreigners and institutions posted net sales of 147.6 billion won and 135.1 billion won, respectively. Retail investors were net buyers of 340.7 billion won.

Supply disruptions in naphtha triggered by the Iran war sent shares tied to the “anti-plastic” theme soaring, including Korea Package (29.9%) and Ecoplastic (5.26%). NHN Bugs plunged 10.33% to end lower after disclosing that its sale had fallen through.

The won-dollar exchange rate rose. In the Seoul FX market, the won ended daytime trading at 1,515.7 per dollar, up 6.8 won from the previous session.

Noh Jeong-dong, Hankyung.com reporter dong2@hankyung.com