(Bloomberg) — Chipmakers drove a rebound in South Korean stocks, as hopes that the Iran war may be nearing an end revived risk appetite.
The Kospi Index soared nearly 9%, with Samsung Electronics Co. and SK Hynix Inc. extending gains in afternoon trading to more than 13% and 11%, respectively. The small cap Kosdaq gauge also jumped more than 6%, briefly triggering a halt in program trading by the exchange.
The rally follows a four-day slide that had pushed the equity benchmark to the brink of a bear market. A sense of relief swept across global markets after both the US and Iran are looking toward a conclusion to their weekslong military conflict.
Korean stocks are rallying due to a “global risk-on shift driven by the rebound in US equities, with a tech-led bounce lifting the Korean market,” said Ha SeokKeun, chief investment officer at Eugene Asset Management. Also in play is a technical rebound from short-term oversold conditions, triggering short covering and bargain buying, he said.
Other tailwinds for the market came from data showing memory product prices rose in March, helping confirm that the artificial intelligence boom is still on track. US tech also got a lift Tuesday from Nvidia Corp.’s plan to take a $2 billion stake in Marvell Technology Inc. and completion of OpenAI’s largest funding round to date.
The Iran war triggered sharp volatility in Korean equities, which swung from being the world’s top performers through February to the worst-performing market in March. Tech had taken a hit from war-related stagflation concerns, and memory makers saw an added drag from worries that a Google compression technology could sap demand.
Markets continue to swing on daily headlines, and much uncertainty remains. President Donald Trump is scheduled to give a speech on the war on Wednesday at 9 p.m. Washington time.
Local funds were buyers of Kospi shares, on a net basis, while overseas investors and retail traders sold.
“For those who still believe the regional conflict is not over yet, this is a good time to take profit,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global. The are “still plenty of elements of surprise,” with energy prices likely to remain elevated until the end of the year.
(Updates price gains.)
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