Asia-Pacific stock markets experienced significant declines for the third consecutive trading session. On March 4, the Korea Composite Stock Price Index (KOSPI) closed down more than 12%, marking its largest single-day drop on record. After falling 8% during the session, trading was halted for 20 minutes due to a circuit breaker trigger. The previous day, the index had also dropped over 7%. Over two days, cumulative losses expanded to 20%, erasing all gains from February and setting the worst two-day decline since 2008. Among heavyweight stocks, Hyundai Motor fell more than 15%, Samsung Electronics declined over 11%, and SK Hynix dropped nearly 10%. Samsung Electronics and SK Hynix together account for approximately 40% of the weighting in the KOSPI index. By the close of trading, Japan's Nikkei 225 index also fell sharply by 3.61% to 54,245.54 points, hitting its lowest level in nearly a month. During the session, the index dropped more than 4%, falling below the 54,000-point mark. Additionally, the MSCI Asia Pacific Index fell as much as 4.5%, recording its largest single-day drop in nearly a year. On the news front, according to reports, the U.S. Secretary of Defense stated at a press conference on the 4th that the United States and Israel aim to "fully control" Iranian airspace within a week. He also mentioned that a U.S. submarine sank an Iranian warship in the Indian Ocean. Furthermore, a senior Iranian commander, who had previously attempted to plot an assassination of former U.S. President Donald Trump, was killed. Analysis by Yonhap News Agency pointed out that the two consecutive days of sharp declines in the South Korean stock market were influenced by multiple factors. First, the KOSPI index rose 24% in January and 19.5% in February this year, indicating short-term overheating in the market. Second, East Asian countries, including South Korea, are highly dependent on Middle Eastern crude oil, and rising geopolitical risks further intensified market volatility. According to Tareck Horchani, Head of Prime Brokerage at Maybank Securities in Singapore, this appears more like position unwinding and risk reduction rather than a substantial deterioration in profit fundamentals. When oil prices surge sharply and foreign exchange volatility spikes, global capital tends to quickly withdraw from the most liquid index heavyweight stocks. This sell-off was concentrated in these very stocks. Bloomberg strategist Garfield Reynolds noted that as long as concerns about potential further spikes in crude oil prices persist, the decline in Asian stocks may not end. The high dependence of the Asia-Pacific region on Middle Eastern oil and gas means that sharp fluctuations in crude oil futures will force investors to continuously factor in worst-case scenarios. "Market volatility is too extreme; prediction is nearly impossible, and analysis is of little help," stated An Hyungjin, CEO of Billionfold Asset Management in Seoul. "Retail investors also seem hesitant, as buying interest has been fading since yesterday. Although we select quality stocks and hedge, this is not an obvious investment opportunity." The rapid development of artificial intelligence had previously driven significant gains in the South Korean stock market. Last year, South Korean stocks, with a full-year gain of 76%, became one of the best-performing markets globally, and the KOSPI index recorded its best performance since 1999. Entering 2026, the South Korean market continued to climb, breaking through the 5,000-point mark for the first time on January 22 and then surpassing 6,000 points on February 25. Is this sharp decline a mid-bull market pause or the beginning of a bubble burst? Cameron Chui, Equity Strategist at J.P. Morgan Private Bank, said, "The South Korean stock market has performed strongly this year; some profit-taking was expected. As long as the escalation of the Iran conflict remains controllable, this pullback constitutes a buying opportunity." Dave Mazza, CEO of Roundhill Investments, also analyzed, "This looks more like position adjustment rather than a break in South Korea-specific fundamentals. When global risk appetite shifts and energy and foreign exchange market volatility increases, investors tend to rapidly de-risk by targeting the largest, most liquid index components." Notably, retail investors had previously heavily used margin financing to buy stocks. Data showed that margin balances had risen to historical highs before the market correction. However, with the sharp decline in stock prices, these leveraged positions now face the risk of margin calls or forced liquidation. Kim Dojoon, CEO and Chief Investment Officer of Zian Investment Management in Seoul, pointed out that many investors bought stocks on margin with only 30% to 40% down payment. If stock prices continue to fall, it could trigger more forced liquidations. Bloomberg analysis suggests that this sell-off might be viewed as a painful but healthy deleveraging process. It could weed out momentum speculators who chase rallies and sell during declines, allowing the market to return to investors who genuinely focus on corporate earnings and reasonable valuations.