Foreign investors return with W1tr in net purchases, chip stocks lead swift recovery
South Korea’s benchmark Kospi surged over 5 percent Tuesday, rebounding from the previous day’s steep sell-off as hopes for an early end to the conflict in the Middle East lifted global markets.
After US President Donald Trump said Monday that the war with Iran was “very complete,” oil prices fell below $90 per barrel, helping drive a recovery in equities worldwide, including in Korea.
The Kospi reclaimed the 5,500 mark, closing the session at 5,532.59, up 5.35 percent from the previous session. After opening with a 5.17 percent gain, the index surged as high as 6.55 percent intraday to touch 5,595.88 points.
A surge in Kospi 200 futures also activated a buy-side sidecar at 9:06 a.m., temporarily halting program buy orders. It was the fifth buy-side sidecar triggered on the main bourse this year.
The rebound followed Monday’s 5.96 percent plunge, when both a sell-side sidecar and a circuit breaker were triggered.
Foreign investors returned to the market after heavy selling the previous day, buying a net 1.09 trillion won ($740 million) of shares. Institutional investors also purchased a net 847.2 billion won, while retail investors were net sellers, offloading 1.83 trillion won.
Market heavyweights Samsung Electronics and SK hynix climbed 8.3 percent and 12.2 percent, respectively, recovering from the previous day’s sharp declines of 7.81 percent and 9.52 percent.
The two chipmakers have seen heightened volatility since the outbreak of the conflict, with daily price swings approaching 10 percent.
Defense-related stocks retreated as expectations of an early end to the conflict grew, with Hanwha Systems and Hyundai Rotem falling 4 percent and 3.49 percent, respectively.
Airline stocks surged as international oil prices eased, with Hanjin KAL climbing 9.21 percent and Korean Air up 8.71 percent.
The tech-heavy Kosdaq also posted gains. It closed at 1,137.68 points, rising 3.21 percent from the previous session, led by retail and institutional buying.
With risk-off sentiment easing, the Korean won strengthened against the dollar. The currency was quoted at 1,469.3 per dollar as of daytime trading’s close, strengthening 26.2 won from the previous session. The dollar index fell 0.41 percent to 98.77.
Woori Bank economist Min Kyung-won said falling oil prices and limited foreign selling could help support the currency though geopolitical uncertainty lingers.
“Uncertainty surrounding the war remains, and market sentiment continues to shift with headlines, so it is too early to be certain,” Min said.
silverstar@heraldcorp.com
