Seoul: South Korea's main KOSPI index exceeded the 7,000-point mark for the first time in history on Wednesday, fueled by a surge in technology stocks driven by increasing demand for high-end chips. This milestone comes as global tech giants are in a race to expand their artificial intelligence (AI) data centers.
According to Yonhap News Agency, investor sentiment was also bolstered by the containment of the Middle East conflict, which has not escalated into a broader regional issue. The KOSPI began the session at 7,093.01, a 2.25 percent rise from the previous day, and by 10:27 a.m., it had soared 5.12 percent to 7,292.19. The nation's bourse operator reported a brief halt in program trading due to overheating concerns.
Amid the two-month conflict in the Middle East, U.S. President Donald Trump suggested the possibility of pausing U.S.-led efforts to aid ships stranded in the Strait of Hormuz, aiming for a potential deal with Iran to resolve the conflict.
With the KOSPI crossing the 7,000 threshold, its market capitalization reached over 6,000 trillion won (US$4,116 billion) for the first time. The index's recent performance has been driven by robust gains in AI-related stocks, continuing a record-breaking trend.
Last Wednesday, the KOSPI hit 6,600 and climbed over 6,900 by Monday, fueled by strong bets on technology stocks and optimistic signs of a truce in the Middle East, tracking rallies from the U.S. stock market.
Lee Kyung-min, an analyst at Daishin Securities, noted that the KOSPI still has potential for further growth, attributing the rise to performance-based factors. Despite past downturns during the coronavirus pandemic, current valuations remain attractive, Lee added.
The AI boom has bolstered major technology stocks in Seoul, with Samsung Electronics rising 12.04 percent and SK hynix increasing by 9.88 percent. Hyundai Motor and Kia Motors saw gains of 2.78 percent and 1.36 percent, respectively. Banking giants KB Financial Group and Shinhan Financial Group also experienced growth, with increases of 2.53 and 1.43 percent.
Reflecting the positive market sentiment, analysts have adjusted their KOSPI index targets. Han Ji-young, from Kiwoom Securities, highlighted the improved outlook based on strong first-quarter performance and support from industries like semiconductors.
In a particularly optimistic forecast, Hana Securities anticipated that the KOSPI could surpass 8,000 this year, assuming the U.S. Federal Reserve might lower interest rates once or twice within the year.