Trump turmoil in Asia sends chills through Seoul while China keeps its cool
The war in the Middle East has sent shockwaves through global markets, stoking volatility across exchanges and asset classes everywhere. But one region, Asia, has been particularly exposed, due to its position at the forefront of the daily trading cycle.
As the latest on-the-ground headlines line up alongside President Donald Trump’s erratic social media posts and unpredictable press conferences, investors in Tokyo, Hong Kong and Singapore must define sentiment as they inherit a late-night US news cycle and move into a new trading session.
Across the region, traders have been faced with this Trump turmoil at a highly sensitive time for market sentiment. As regular Wall Street trade ends and the baton is taken up in the east, the change takes place amid a blur of confusion to define the right mix of fear and optimism, as required from reading the wires and digesting the latest diatribe from the White House.
At the hands of Trump
It has become commonplace for major stock benchmarks to plummet into the red before clawing back gains the very next day across the region. Japan’s Nikkei 225 sank 13 per cent over March.
In India, the Sensex tumbled almost 12 per cent while the Nifty 50 fell by over 11 per cent.
South Korea’s Kospi is a particular case in point. It recorded one of the largest slumps, down by over 19 per cent for March to the end of the month. Then came Trump’s 1 April comments that the war will soon end, and the wider relief rally.
The recovery in Seoul, as across the rest of Asia and the world, remains at the mercy of events. Its rally since the start of the month has faltered in line with fading hopes of a swift end to the war.
For April, the index is up by almost 8 per cent. Since the first US and Israeli airstrikes against Iran on 28 February, the Kospi is down overall by over 13 per cent.
It is a volatile run familiar to Asia and Europe. But there are particular lessons for the United Kingdom too, because much of South Korea’s exposure relates to its need to import much of its energy, like the UK.
Energy importer
South Korea’s president, Lee Jae Myung has urged citizens to “save every drop of fuel”.
South Korea is heavily dependent on the Strait of Hormuz, with roughly 70 per cent of its oil imports routed through the maritime channel at the centre of the war. Such high numbers anchored in such troubled waters have spooked investors.
There is an added incentive for them to head for the exits. The Kospi was exposed to profit taking after an astonishing rally of around 80 per cent rally for 2025. It hit a market value of 3,748 trillion won (£2 trillion), fuelled in particular foreign institutional investors.
The tech-heavy market is an export powerhouse, something it does not have in common with the UK. It is reliant on two tech giants – Samsung Electronics and SK Hynix – both rocked by supply chain problems relating to Hormuz. The companies source helium through the strait.
While such supplies are critical, analysts point out that demand is expected to survive disruption.
Market domination
Simbarashe Mangwiro, senior investment analyst at Morningstar Wealth, said: “Despite the sell off, we are not overly concerned as the market is dominated by Samsung Electronics and SK Hynix, where direct energy costs are a small share of their overall cost base.
“There is also ample scope to pass any incremental costs to their customers given the pricing power they have in this AI‑driven memory cycle.
“Risks are therefore more indirect. These include potential supply disruptions to key inputs such as helium and bromine, which are used in semiconductor manufacturing, as well as the possibility that sustained high energy prices could eventually temper hyperscaler spending on AI infrastructure.
“While these factors warrant monitoring, they are secondary to the much larger drivers of AI‑led demand growth.”
As South Korea clings to hope of a ceasefire, one of its biggest regional and global rivals has managed to avoid major losses and in some instances granted the opportunity to boost its global market standing: China.
China optimism
Major stock market indexes there have fallen over the last month. Nonetheless, they have avoided the extent of the sell-off that has plagued the rest of the region.
Shanghai’s Composite fell over 6 per cent in March, erasing much of its year-to-date gain, weighed down by a higher number of small and mid-cap companies, which typically have less liquidity while being heavily weighted in sectors such as domestic energy and manufacturing.
High oil prices briefly helped the index’s energy stocks but the ongoing closure of the strait has raised concerns around costs for its manufacturing bases, damaging margins.
China’s s CSI 300 fell by just under 6 per cent in the month. This index, which tracks the largest companies listed in Shanghai and Hong Kong, tends to benefits from aggressive state intervention.
Central Huijin Investment, a unit of China’s sovereign wealth fund, along with other state-backed vehicles frequently buys stocks to stabilise the onshore market during periods of tension and volatility.
The People’s Bank of China has also increased its liquidity injections to prevent a market collapse.
Hong Kong’s Hang Seng was down by around 7 per cent. It was insulated from the worst of the volatility from Chinese policy support.
Mangwiro said: “For China, valuations remain modest relative to global peers, and incremental improvements in profitability can act as a meaningful catalyst for further re‑rating.
“Recent government efforts to tackle excess capacity and curb destructive competition, the so-called anti-involution policy, across industrial and manufacturing sectors should help stabilise margins and improve returns on capital.
“At the same time, the adoption of AI has the potential to drive productivity gains and cost efficiencies, supporting earnings growth.”
Chinese exporters market share
The war has also granted China’s exporters the chance to grow its global market share from rivals which have been shocked by the energy crisis.
Factories have claimed that they should be able to maintain production off the back of the country’s large oil reserves and domestic energy supplies.
The conflict has also spurred investment in clean energy, with Starmer voicing the need to do so during a press conference on Wednesday, which would also benefit the nation.
China has leaned on exports in recent years to offset weak domestic demand, while Beijing has pushed investment towards high-end energy sectors, including solar panels and electric vehicles.