Kospi breaks past 9,000 milestone despite the hawkish rate signals

The Kospi surged past the 9,000 points on Thursday — setting another fresh record — after the U.S. signing of an interim agreement aimed at ending the Iran war raised AI optimism, boosting the shares of local chipmakers despite the Federal Reserve's hawkish shift. 

The Kospi's market cap topped 7.41 quadrillion won ($4.85 trillion) on the day, up almost 110 percent from 3.56 quadrillion won at the beginning of the year.  

The benchmark index closed at 9,063.84 points, up 2.25 percent, as the U.S.-Iran agreement is set to reopen the Strait of Hormuz, a key trade waterway for energy that is especially crucial for Korea as the country imports roughly 70 percent of its oil and 20 percent of its liquified natural gas from the Middle East.

"The U.S.-Iran deal to end the war is boosting sentiment in the Korean stock market, as lower oil prices tend to benefit export-oriented, risk-sensitive economies such as Korea, while easing energy-related cost pressures,” said Hwang San-hae, a market analyst at LS Securities.

Korea’s stock market rallied despite Federal Reserve’s hawkish projections on Wednesday, signaling a higher interest-rate path. While the Federal Reserve held the federal funds rate unchanged at 3.5 to 3.75 percent for the fourth meeting in a row, the new U.S. Federal Reserve Chair Kevin Warsh signaled a rate increase in the coming months cannot be ruled out while highlighting the need to tame inflation.

"Despite lingering concerns about higher interest rates, investors piled into cash-generating and profitable companies, particularly semiconductor firms," Hwang said. "The market is increasingly focused on companies that can weather a higher-rate environment rather than hyperscalers investing heavily on leverage in semiconductors."

“Optimism was further bolstered by remarks from Tim Cook, indicating that prices of Apple products will rise due to memory chip crunch, while the implementation of a U.S.-Iran agreement helped soothe broader macroeconomic concerns, including the FOMC [Federal Open Market Committee],” said Kang Jin-hyuk, an analyst at Shinhan Securities. “Still, the rally remained narrowly concentrated in semiconductor names as only 109 stocks advanced on the session and the Kosdaq briefly slipped below the 1,000 mark intraday.”

Nine out of the 18 policymakers who participated in the dot plot projected at least one interest rate hike in 2026. The hawkish shift brought the Nasdaq and S&P 500 to close down by more than 1 percent on Wednesday. But the Wall Street blues didn’t spill across the Korean market.

Korea’s market bellwether Samsung Electronics rose 4.62 percent to 362,500 won, while its rival SK hynix jumped 6.51 percent to 2.69 million won. The acceleration was driven by foreign investors that net purchased 1.3 trillion won, while retail and institutional investors net sold a combined 1.2 trillion won. Non-semiconductors, however, fell. Defense giant Hanwha Aerospace fell 2.86 percent to 1.19 million won, while shipbuilder HD Hyundai Heavy Industries slipped 3.25 percent to 684,000 won. Tech giant Kakao fell 3.08 percent to 39,300 won while KB Financial inched down 0.55 percent to 163,100 won.

The 9,000-point milestone came just 22 trading days after the Kospi broke past 8,000 points during trading on May 15. Global investment banks have raised target for Kospi, with JPMorgan last month having lifted it to 10,000 points in the bull case scenario.

Tech-heavy Kosdaq closed down 3.01 percent to 1,000.93 points, while won traded at 1,527.1, weakening from 1,513.4 won from the previous trading session at 3:30 p.m.

BY JIN MIN-JI [[email protected]]