The world's most powerful stock market experiences the biggest crash in history, and South Korea's regulators unveil a trillion-dollar "market stabilization ammunition."

On Wednesday local time, Korean stock investors experienced a historic day: the Korea Composite Stock Price Index closed at 5093.54, a drop of 12.06% from the previous day. This also means that the drop in the Korean benchmark index exceeded the 12.02% drop on September 12, 2001 (the day after 9/11 terrorist attacks), setting a new record for the largest single-day drop in the index's history. In addition, the Korean KOSDAQ index plummeted by 14%, also marking the largest single-day drop in its history. After Wednesday's close, the year-to-date gain of the Korean composite index narrowed from nearly 50% to 20%. The index had risen by 75% last year, outperforming major global markets. Analysts pointed out that the Middle East crisis hitting Korea's economy, which is export-oriented and highly reliant on Middle East energy, coupled with consecutive significant drops for the second day in a row, raised concerns related to margin call liquidation. Kim Dojoon, CEO of Seoul's Zian Asset Management, explained that many buyers in the market rely on margin financing, especially for heavy stocks, with investors putting in only 30-40% margin. Now these positions are facing forced liquidation, and if the decline continues on Thursday, no one will rush to catch the "falling knife." Meanwhile, foreign investors led the selling spree for a second day, pushing the Korean won sharply weaker, approaching the 1,500 won per dollar mark. The market is now watching whether the Korean government will take actions to stabilize the market. Last week, Korean President Lee Jae-myung listed his apartment in Seoul for sale to show the government's determination to stabilize real estate prices. This action coincides with Korea's encouragement of funds moving from the real estate market to the stock market. Local media cited a "presidential official" as saying that Lee Jae-myung seems to believe that selling real estate to invest in stock ETFs will create greater economic benefits than holding on to the property. At the time of the sharp drop in the stock market on Wednesday, Bank of Korea Governor Lee Chan-yeong postponed his trip to Bangkok to attend an IMF meeting and held an emergency meeting with the Ministry of Finance to assess the latest developments in the financial markets. After the meeting, the Bank of Korea stated that the volatility of exchange rates, interest rates, and stock prices may remain at high levels for a period of time, depending on the development of the situation in the Middle East. The central bank will coordinate with the government if necessary to prevent market sentiment from becoming too one-sided. After the close on Wednesday, the Financial Services Commission of Korea held an "emergency financial market situation review meeting," chaired by FSC Chairman Lee Eun-yeon, jointly with the Financial Supervisory Service and financial market experts to assess the market situation. According to the official report after the meeting, participants attributed the current market volatility to the combination of two factors: rising geopolitical risks in the Middle East and profit-taking demands following the significant rise in the stock market. At the same time, participants "generally believe" that the possibility of a "trend reversal" in the Korean market is low due to factors such as improving corporate profits, active policies in capital markets, and continuous capital inflows. Lee Eun-yeon stated during the meeting that they will closely monitor any behavior that disturbs market order and spread of false information, and will strictly punish any offenders based on a "zero tolerance" principle. He also instructed relevant departments to closely monitor market trends, and in case of excessive market fluctuations, to actively initiate the currently operating 1 trillion won (approximately 530 billion yuan) market stabilization plan. This article was reproduced from "Finance Link" by author Shi Zhengcheng; GMTEight editor: Feng Qiuyi.