South Korean Stocks and Won Recover Amidst Oil Price Volatility
South Korean stocks experienced a partial recovery on Tuesday, fueled by positive signals from US President Donald Trump regarding potential strikes on Iranian energy infrastructure. Trump’s indication of a five-day pause boosted risk appetite, mirroring overnight gains on Wall Street.
The benchmark Kospi opened at 5,638.2 points, marking a 4.3 percent increase from the previous trading session, according to the Korea Exchange. This rebound follows a significant 6.5 percent drop the day before.
The Kospi index reached an intraday high of 5,643 before retracting to a low of 5,395.17. It then regained momentum in afternoon trading, reaching 5,537.31, a 2.43 percent increase as of 2 p.m. KST.
Retail investors were key drivers of this recovery, purchasing a net 744.7 billion won ($495 million) worth of shares. This continues their strong buying trend, having acquired approximately 7 trillion won in the previous session. Institutional investors, initially net sellers, shifted to buyers in the afternoon, with net purchases amounting to 298.9 billion won.
However, foreign investors continued their market exit, offloading a net 1.29 trillion won. Their sustained selling pressure briefly pushed the Kospi into negative territory during intraday trading.
Major stocks largely rebounded. As of 2 p.m. KST, Samsung Electronics saw a 1.83 percent increase, while SK hynix surged 5.57 percent. Hyundai Motor and LG Energy Solution also advanced, gaining 1.65 percent and 9.27 percent, respectively.
The tech-heavy Kosdaq also opened higher at 1,134.16, up 3.4 percent from the previous session. It stood at 1,117.83, a 1.91 percent increase as of 2 p.m. KST.
The Korean won exhibited volatility, reflecting ongoing uncertainty related to oil price fluctuations and geopolitical risks.
After weakening to 1,517.3 per dollar in the previous daytime session – the lowest since March 9, 2009, during the global financial crisis – the won briefly strengthened to the 1,480 range, closing after-hours trading at 1,486.7 following Trump’s announcements.
However, the currency resumed its decline in onshore trading on Tuesday. It opened at 1,490.9 per dollar and weakened past the 1,500 threshold to 1,500.48 as of 2 p.m. KST, despite a sharp decrease in global oil prices.
Brent crude oil fell 10.9 percent from the previous session, settling at $99.94 per barrel, while West Texas Intermediate declined 10.3 percent to $88.13. Brent, which had briefly exceeded $114 in Asian trading, dropped to the $96 range immediately after Trump signaled the potential pause.
“Even the mere prospect of an end to the war has boosted market sentiment, easing the sharp risk-off mood seen the previous day, though caution still lingers,” said Min Kyung-won, an economist at Woori Bank.
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