South Korean assets surged after President Donald Trump agreed to a two-week ceasefire with Iran, easing fears of prolonged disruptions to global energy supplies and triggering a broad risk-on move.
The benchmark Kospi surged as much as 6.2%, leading gains in Asia and extending advance for the fourth straight session. Chip heavyweights Samsung Electronics Co. and SK Hynix Inc. both jumped more than 9%. A more than 6% jump in Kospi 200 futures also triggered a temporary halt in program trading by the exchange.
The South Korean won rose as much as 1.9% against the dollar. The nation’s 10-year bond futures climbed as much as 120 ticks, while the 3-year yields fell to 3.3% as lower oil prices eased inflation pressures and lowered expectations for a Bank of Korea rate hike. The central bank will hold its rate setting meeting Friday.
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Wednesday’s advance comes as a sharp drop in oil prices lifted sentiment for one of the region’s most energy-dependent economies, putting investors’ focus back on the artificial intelligence trade and corporate governance reforms.
“With geopolitical risks moderating and a fundamental earnings surprise unfolding simultaneously, this moment appears to mark a pivot point where the market transitions from a war-risk-driven discount phase toward a normalization phase,” said Ha SeokKeun, chief investment officer at Eugene Asset Management Co.
This can be seen as an indication that the energy shock — previously the main risk to the Korean equity market — now beginning to ease in a significant way, he added.
The won is trading at its highest level since March 11, while 10-year bond futures are at their highest since March 19. Both have rebounded to their strongest levels in about a month.
The energy shock has pushed South Korea’s government to take increasingly aggressive steps, including a fuel price cap, to shield the economy. Authorities have also signaled contingency plans to curb energy demand and stabilize prices, highlighting the extent of the strain on an economy heavily reliant on imported oil.
“This is a relief buy from the earlier excessive selloffs,” said Francis Tan, Asia chief strategist at Indosuez Wealth in Singapore. He added that the underlying drivers of higher energy prices are unlikely to shift significantly anytime soon, as lost capacity cannot be restored quickly.
Meanwhile, the ongoing back-and-forth tensions persist because trust between the nations involved cannot be rebuilt overnight. “So, buyers beware,” Tan warned.
With assistance from Susie Kang and Jaehyun Eom.
This article was generated from an automated news agency feed without modifications to text.
