Seoul: South Korean stocks saw a strong rebound, climbing by more than 2 percent to close above the 7,800-point mark on Wednesday. This surge was driven by a rally in semiconductor and auto shares as investors remained optimistic despite ongoing Middle East tensions ahead of the U.S.-China summit. Conversely, the South Korean won fell against the U.S. dollar.
According to Yonhap News Agency, the Korea Composite Stock Price Index (KOSPI) opened 1.69 percent lower but managed to reverse the trend, finishing at 7,844.01. This marked an increase of 200.86 points, or 2.63 percent. The previous day, the index had dropped by 2.29 percent to 7,643.15, concluding a five-session bullish run that had been fueled by tech stocks.
The trading session was marked by heavy activity, with a trade volume of 733.4 million shares valued at 49.7 trillion won (approximately US$33.4 billion). Despite the overall market uptick, the number of declining stocks exceeded that of advancing ones, with 599 losers compared to 281 winners.
Individual investors and institutions were the primary drivers of the market's upward movement, purchasing net stocks worth 1.9 trillion won and 1.7 trillion won, respectively. Foreign investors, on the other hand, sold off a net 3.7 trillion won worth of stocks.
Despite concerns over rising U.S. inflation, which increased at the fastest rate in nearly three years in April, and oil prices surpassing US$100 per barrel due to diminished expectations for a Middle East peace deal, investor sentiment improved. This optimism was fueled by hopes that the upcoming U.S.-China summit might mitigate concerns related to the Iran conflict.
Additionally, domestic market sentiment was bolstered when South Korea's prime minister and finance minister urged Samsung Electronics' management and labor to resume negotiations concerning pay raises and bonus payments. Previous mediation talks had failed to resolve key issues.
Lee Kyung-min, an analyst at Daishin Securities, noted that "eased risks at home and abroad helped the KOSPI turn around," highlighting the role of AI-related stocks like Samsung Electronics, SK hynix, and SK Square in leading the market's recovery.
President Lee Jae Myung clarified on social media that his chief policy adviser's viral post about redistributing profits from the AI boom was a discussion on reallocating surplus tax revenue, rather than imposing a new tax on corporate profits. This clarification came after remarks by presidential policy chief Kim Yong-beom on profit sharing in the AI era had negatively impacted investor sentiment the previous day.
The semiconductor and auto sectors emerged as the top performers on Wednesday. Samsung Electronics saw a gain of 1.79 percent, reaching 284,000 won, while SK hynix soared 7.68 percent to 1.98 million won. AI investment firm SK Square increased to 5.68 won, closing at 1.19 million won. Samsung Electro-Mechanics, a Samsung Electronics affiliate, jumped 7.41 percent to 1.03 million won.
In the automotive sector, Hyundai Motor experienced a significant surge of 9.91 percent to 710,000 won, with its sister company Kia advancing 6.65 percent to 197,500 won. Among major retailers, Shinsegae climbed 9.29 percent to 482,500 won, and Lotte Shopping rose 5.54 percent to 160,100 won.
Conversely, defense giant LIG D and A saw a decline of 0.68 percent to 873,000 won, and leading banking group KB Financial Group decreased by 1.04 percent to 152,000 won. In the biotech sector, Samsung Biologics fell 2.29 percent to 1.41 million won, while Celltrion dropped 1.45 percent to 190,500 won.
The Korean won was quoted at 1,490.6 against the U.S. dollar at 3:30 p.m., having briefly reached the 1,499.9 level during the day. Bond prices rose as yields fell, with the yield on three-year Treasurys dropping 3.9 basis points to 3.635 percent, and the return on five-year government bonds declining 1.7 basis points to 3.853 percent.