South Korean assets surged after a last-minute temporary truce in the six-week old war in Iran raised hopes of easing energy supply disruptions, lifting risk appetite.
The benchmark Kospi rose 6.9%, leading gains in Asia and extending advance for the fourth straight session. Chip heavyweights Samsung Electronics Co. and SK Hynix Inc. gained 7.1% and 13% respectively.
The South Korean won rose as much as 2.1% against the dollar. Ten-year bond futures rose 110 ticks as lower oil prices eased inflation and tempered expectations of a Bank of Korea rate hike ahead of Friday’s policy meeting.
Read: Samsung Beats High Estimates After AI Chip Sales Defy War Fears
The US and Iran agreed to a two-week ceasefire expected to halt the American-Israeli military campaign, in exchange for Tehran reopening the Strait of Hormuz, portending a temporary de-escalation while broader tensions may remain unresolved.
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.
“Korea is one of the clearest beneficiaries of any ceasefire because it had been squeezed from both directions: higher energy costs and weaker risk appetite,” Dave Mazza, chief executive officer at Roundhill Investments.
“But for now view it as a tactical pivot, not a full all-clear, with memory names like Samsung Electronics and SK Hynix among the clearest beneficiaries if the de-escalation holds.”
The Kospi is up nearly 40% so far this year, adding to last year’s stellar gains. Retail investors were heavy net sellers on Wednesday, offloading a record 5.4 trillion won of Kospi stocks, while foreign investors and domestic institutions absorbed most of the supply. A spike in Kospi 200 futures in the morning also triggered a temporary halt in program trading by the exchange.
Renewed foreign inflows have helped lift the won to its strongest level since March 11, while 10-year bond futures have climbed to their highest since March 19.
“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 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.
