Seoul: South Korea's benchmark Korea Composite Stock Price Index (KOSPI) concluded Tuesday's trading session above the 8,000-point mark, as foreign investors returned as net buyers of local stocks, driven by optimism that the United States and Iran may be nearing a peace agreement to end the war in the Middle East.
According to Yonhap News Agency, the KOSPI surged more than 2.8 percent, opening at 8,070.91 points, surpassing the previous intraday high of 8,046.78 points achieved on May 15. During the trading session, the index reached as high as 8,131.15 points before closing at 8,047.51 points, marking an increase of 2.55 percent from the previous session's close. This closing figure represents the first time the main bourse has reached such heights.
The bullish market sentiment has been fueled by foreign investors' demand for riskier assets, spurred by growing optimism over a potential peace deal between the U.S. and Iran. This marks the first time in 13 trading sessions that foreign investors have been net buyers of local stocks. U.S. President Donald Trump indicated that peace negotiations with Iran were progressing "nicely," though he cautioned that failure to reach a deal would result in U.S. attacks on a "bigger and stronger" scale than before.
Trump's comments came as Washington and Tehran worked towards signing a framework that, according to reports, would extend their ceasefire for 60 days, reopen the Strait of Hormuz, and continue discussions on Iran's nuclear program.
The index's rise has been significantly supported by heavy investments in stocks associated with the artificial intelligence (AI) spending boom, notably Samsung Electronics Co. and SK hynix Inc. Although some analysts have raised concerns about a potential bubble from the new technology, the AI boom has propelled these shares to new heights.
Shares of Samsung Electronics and SK hynix have been major contributors to the robust performance of the local stock market. SK hynix shares jumped 5.72 percent, closing at 2.05 million won (US$1,329), while Samsung Electronics saw an increase of 2.22 percent, finishing at 299,000 won. The market capitalization of SK hynix has risen to 1,473 trillion won, positioning it to potentially surpass Samsung Electronics and achieve the US$1 trillion milestone in stock value.
While some analysts anticipate the KOSPI's rally to continue in the short term, they caution that the bull market has predominantly been driven by heavyweight semiconductor stocks. This month, approximately 43 percent of the daily average trading value on the KOSPI has been concentrated on Samsung Electronics and SK hynix.
"The key is whether industrial sectors other than semiconductors will turn around," noted Heo Jae-hwan, an analyst from Eugene Investment and Securities.