Optimism builds as analysts forecast continued gains on policy, global tailwinds
The South Korean benchmark Kospi broke through the 2,900-point threshold for the first time in over three years Wednesday, marking a notable milestone as it extends its bullish rally.
The Kospi closed daytime trading at its day-peak of 2,907.04, rising 35.19 points or 1.23 percent from the previous session. It was the first time for the index to surpass the 2,900 level in over three years since it peaked at 2,902.79 on Jan. 18, 2022.
The index opened at 2,887.32 and inched up, soon surpassing the 2,900 mark. Though it pared some gains, retreating to as low as 2,879.92 at around 11 a.m., it quickly turned to gain and stayed above the 2,900 level until the daytime trading closed.
The rally followed overnight gains on Wall Street, driven by growing expectations of improved trade conditions between the US and China. Hopes are rising that restrictions on semiconductor sales to China may be eased.
The index has been on a six-day winning streak, which began a day before the country’s presidential election on June 3.
A massive influx of foreign capital has fueled the rally. Offshore investors purchased 3.94 trillion won ($3 billion) worth of shares on the Kospi in June through Wednesday, extending the 1.16 trillion won net buying spree seen in May, according to Korea Exchange data.
On Wednesday, foreigners had net bought 166 billion won worth of shares, while institutional investors purchased 230 billion won. Retail investors, meanwhile, sold off 366 billion won, likely to lock in profits.
Blue-chip shares showed strong performances with tech giants leading the game, tracking the bull's run in US chip stocks.
Bellwether Samsung Electronics closed daytime trading at 59,900 won on Wednesday, just before the 60,000 won threshold, gaining 1.18 percent. SK hynix wrapped up trading at 240,000 won, up 4.12 percent.
On the back of expectations for a de-escalation in the trade war, shares of market heavyweights LG Energy Solution, Hyundai Motor and Kia were also traded higher, while Hanwha Solution was the strongest performer on the Kospi, gaining by 22.99 percent.
In an attempt to support the rally, President Lee Jae-myung visited the Korea Exchange offices in Yeouido, western Seoul, on Wednesday, where he held a meeting to discuss measures to prevent unfair trading.
During the election campaign, Lee pledged to usher in a “Kospi 5,000 era” by strengthening minority shareholder protections.
With the continuing upward momentum of the Kospi, local brokerage firms are upping their outlooks.
KB Securities, for instance, raised its 12-month target for the Kospi to 3,240 points by the first half of 2026.
“Although tariff risks are expected to continue through the third quarter, along with an increased possibility of a recession if the threats materialize into actual impositions, the Korean stock market is likely to demonstrate relatively strong resilience, supported by a weakening dollar, domestic stimulus measures and ongoing capital market reforms,” analyst Lee Eun-taek from KB Securities said.
“By the fourth quarter, trade tensions could enter a phase of resolution, leading to a rise in risk appetite and revitalized investment activity,” Lee added.
Amid the rally, the secondary bourse Kosdaq wrapped up daytime trading at 786.29, up 15.09 points or 1.96 percent.
The Korean won was quoted at 1,375 per dollar as of daytime trading closing, losing value by 10.7 won from the previous session as the greenback appreciated on the back of the expectation of improved trade ties between the US and China.
silverstar@heraldcorp.com
