Seoul: South Korea's benchmark stock index, the KOSPI, surpassed its pre-Middle East-crisis high on Tuesday, showing potential to reach a new peak amid hopeful developments in U.S.-Iran peace talks and a resurgence in the tech sector.
According to Yonhap News Agency, the KOSPI opened higher and hovered around the 6,340-point mark at approximately 11:20 a.m., marking an increase of nearly 2 percent from the prior session's close. The index achieved an intraday high of 6,361.17, surpassing its previous record on February 26, when it closed at 6,307.27.
The KOSPI experienced significant fluctuations due to the U.S.-Iran conflict, with single-day losses reaching up to 12 percent and gains up to 9 percent. The recent upswing is attributed to renewed optimism surrounding South Korea's major chipmakers and reduced sensitivity to Middle East events, according to Han Ji-young, an analyst at Kiwoom Securities.
Samsung Electronics, a leading company in South Korea, reported unprecedented earnings in the first quarter, with an operating profit exceeding 50 trillion won. This growth was supported by rising chip demand fueled by advancements in artificial intelligence. SK hynix is also expected to announce impressive first-quarter earnings, contributing to the positive market sentiment.
Han noted that market volatility has decreased, and despite the impact of the Middle East crisis on global stock markets, foreign investors are returning to the South Korean market. Last month, foreign investors sold a record 35 trillion won (US$23.8 billion) worth of local stocks.
Market analysts predict that government initiatives to improve shareholder returns and reform capital markets could further boost the KOSPI's growth. Goldman Sachs recently adjusted its 12-month target for the KOSPI from 7,000 to 8,000 points, highlighting enhanced industry fundamentals. Meanwhile, JPMorgan Chase and Co. maintains South Korea as a "top preferred market" in the region, raising its "bull" case for the KOSPI to 8,500 points.