People walk through the neon-lit streets of Sinchon at night, in the heart of South Korea’s vibrant capital, Seoul.
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South Korea’s Kospi rose as much as 12% on Thursday, showing a sharp recovery from its worst trading days and on track for its best day yet, according to LSEG data.
The index then pared its gains, rising 9.6% to 5,583.9, with majors SK Hynix and Samsung Electronics gaining more than 10% and 11%, respectively.
The small-cap Kosdaq closed 14.1% higher at 1,116.41.
The Korea Exchange on Thursday suspended trading on both its benchmark KOSPI index and KOSDAQ following the sharp rise.
The Kospi index fell 12% on Wednesday, its worst single-day decline.
Daniel Yoo, global market strategist at Yuanta Securities, said the recovery in the Korean stock market was mainly driven by a reversal of leveraged selling. “It has nothing to do with fundamentals,” he said.
He said a series of margin calls among retail investors led to heavy selling earlier in the week, but once those positions were unwound, the market began to recover.
Year-to-date performance of Korean stocks
“(Wednesday’s) sell-off was primarily driven by upside risks to oil prices due to evolving geopolitical developments,” said Raisa Rashid, global market strategist at JPMorgan Asset Management.
“Since South Korea is a major oil importer, the uncertainty about how high oil prices will rise could put pressure on the current account balance and increase inflationary pressures,” he said.
Market participants said that as oil prices began to stabilize, risk sentiment improved and Korean stocks rebounded.
U.S. Treasury Secretary Scott Bessent said Wednesday that Washington will roll out a series of measures aimed at stabilizing oil shipments through the Persian Gulf, signaling the government’s readiness to intervene as geopolitical tensions threaten one of the world’s most vital energy corridors.
Furthermore, JPMorgan’s Rashid added that demand and supply dynamics in the memory chip space are likely to remain tight throughout this year and possibly next year, with long-term structural factors for Korean stocks remaining intact. Memory giants Samsung and SK Hynix account for nearly 50% of the index, according to Morningstar data.
Similarly, Kieron Poon, director of Asian equities at Aberdeen Investments, said Tuesday’s selloff reflected pent-up risk-off sentiment and losses, as Wednesday’s sell-off was also exacerbated by Monday’s post-holiday catch-up in South Korea.
Other Asia-Pacific markets also rose sharply on Thursday, rebounding after several days of steep declines as sentiment improved following Wall Street’s gains overnight and concerns over soaring oil prices easing.
australian S&P/ASX 200 It rose 0.44% to close at 8,940.3.
Japanese Nikkei Stock Average It rose 1.9% to close at 55,278.06.
Hong Kong hansen index The CSI300 index rose 0.98% to 4,647.69 after China on Thursday set its 2026 GDP growth target at 4.5% to 5%, the lowest on record dating back to the early 1990s, as the government grapples with persistent deflationary pressures and trade tensions with the United States.
The target is a downward revision from the “approximately 5%” set for the past three years and is the world’s second-largest economy’s most modest target so far, apart from 2020, when the Chinese government did not set a growth target due to the pandemic.
The Chinese government also kept its fiscal deficit target unchanged from last year’s “about 4% of gross domestic product” as the country’s top legislative body, the National People’s Congress, holds its annual meeting this week.
“Global markets are likely to remain volatile in the short term, and there is still room for further declines if global risk aversion continues as the Iran war drags on,” Aberdeen’s Poon said.
U.S. stocks rose overnight, building on momentum seen late in the previous session, as oil prices rebounded following developments in the U.S.-Israel war against Iran and concerns about U.S. economic growth receded.
of Dow Jones Industrial Average It added 238.14 points (0.49%) to close at 48,739.41. The 30-stock index fell for the third consecutive day. of S&P500 It rose 0.78% to end at 6,869.50. Nasdaq Composite It rose 1.29% to settle at 22,807.48.
Technology stocks supported the market in general and the chip sector in particular. micron technology and advanced micro device Each improved by more than 5%. broadcom and Nvidia Each rose more than 1%.
