Rebound tracks Wall Street gains, easing oil price concerns
South Korean stocks experienced a significant rebound on Thursday, partially recovering from a two-day sell-off that had unsettled the market. Trading halts were triggered on both the KOSPI and KOSDAQ as strong buying activity drove prices upward.
The KOSPI, Korea’s benchmark stock index, opened 3.09 percent higher at 5,250.92 compared to the previous trading session, according to the Korea Exchange. Gains accelerated rapidly after the market opened, reaching an intraday high of 5,715.30 in early trading.
This rebound follows a steep two-day decline. The KOSPI plunged 7.24 percent on Tuesday and 12.06 percent on Wednesday. As of 2 p.m. Thursday, the KOSPI was at 5,636.74, a 10.66 percent increase from the previous close.
Retail investors spearheaded the market rally, with net purchases of 1.59 trillion won ($1 billion) worth of shares. Foreign investors were also net buyers, purchasing 118.1 billion won. Institutional investors were the only net sellers, offloading 1.75 trillion won worth of stocks.
Most large-cap stocks rebounded strongly, partially recouping losses from the previous two sessions.
Shares of Samsung Electronics and SK hynix surged 11.96 percent and 12.37 percent, respectively. Hyundai Motor rose 10.98 percent, while LG Energy Solution increased by 7.77 percent.
All of the top 100 companies by market capitalization listed on the KOSPI saw gains during the session.
The technology-heavy KOSDAQ index also experienced a significant surge, opening 4.64 percent higher at 1,023.84, reclaiming the 1,000-point level. The index continued to climb and stood at 1,135.55, up 16.06 percent, as of 2 p.m.
Amid the sharp early rally, trading curbs were activated on both the KOSPI and KOSDAQ at 9:06 a.m. These impose a five-minute trading halt in futures markets when prices rise sharply, designed to curb excessive market volatility.
Thursday’s market activity was a stark contrast to the previous session, when both the KOSPI and KOSDAQ experienced steep declines that triggered sell-side curbs and circuit breakers, a more stringent form of market intervention aimed at stabilizing trading.
The surge in Korean stocks mirrored overnight gains on Wall Street. US stocks closed higher amid reports of behind-the-scenes talks between Washington and Tehran and indications of stabilizing global crude oil prices, bolstering investor confidence.
“The KOSPI rebounded sharply as bargain hunting emerged after the historic plunge that threatened the 5,000-point level,” said Noh Dong-gil, a researcher at Shinhan Securities. “The gains are primarily driven by large-cap stocks that experienced the most significant losses.”
As risk aversion diminished, the Korean won also strengthened against the US dollar.
The won opened at 1,464 per dollar, strengthening 12.2 won from the previous session. It remained in the 1,460 range, trading at 1,465.98 per dollar as of 2 p.m.
Compared to its recent spike towards the 1,500 level in overnight trading, the won appeared to have recovered some ground.
However, local analysts anticipate that the currency will remain under pressure in the short term due to ongoing geopolitical concerns.
“Considering the potential for the current conflict to continue, the won-dollar exchange rate is expected to reflect a higher geopolitical risk premium for some time,” said Choi Ye-chan, an analyst at SangSangIn Investment & Securities, adding that the won could weaken to around 1,525 per dollar.
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