Kospi Nears 6,000 on Iran Truce Relief, but Fragile Ceasefire Clouds Outlook

Korea Economic Daily

Summary

The Kospi resumed its climb on relief over the U.S.-Iran ceasefire, fueling expectations that the index could break above 6,000.
Samsung Electronics, SK Hynix and other heavyweight stocks, along with construction shares seen as beneficiaries of Middle East reconstruction, led the advance.
Caution is still warranted in investor sentiment, however, as concern over a fragile truce could keep stock-market volatility tied to the war in place through the ceasefire deadline.

Forecast Trend Report by Period

Relief over a ceasefire between the U.S. and Iran is spreading through markets, boosting expectations that the Kospi can extend its rally. Conflicting statements from Washington and Tehran over the terms of the truce, however, are fueling concerns that the ceasefire remains fragile.

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On July 9, the Kospi closed at 5,872.34, up 6.87% from the previous session, according to the Korea Exchange. The benchmark rose as high as 5,910.60 during the day, touching the 5,900 level for the first time in 15 trading sessions since June 18. The Kosdaq also climbed 5.12% to 1,089.85.

Samsung Electronics, which posted more than 57 trillion won in first-quarter operating profit, jumped 7.12% to close at 210,500 won. It was the first close above 210,000 won since Feb. 27, before the war. The combined market capitalization of 17 listed Samsung Group companies reached 1,588.538 trillion won at the close. SK Hynix, ahead of earnings, surged 12.77% to 1,033,000 won, reclaiming the 1 million won level for the first time in 13 trading sessions.

Construction stocks, viewed as beneficiaries of Middle East reconstruction, also posted outsized gains. Daewoo Engineering & Construction rose 29.97% and GS Engineering & Construction added 29.86%, with both hitting their daily upper limits. Hyundai Engineering & Construction, which has extensive experience in the region, climbed 21.04%, while Samsung C&T advanced 12.77%.

On July 8, U.S. stocks in New York surged more than 2%. The Dow Jones Industrial Average gained 2.85%, its biggest rise since April last year. The S&P 500 advanced 2.51%, while the Nasdaq Composite rose 2.80%.

The major indexes opened up more than 3% on news of a ceasefire agreement between the U.S. and Iran. They later gave up part of those gains as uncertainty persisted, with Israeli attacks continuing and Iran's parliamentary speaker referring to a U.S. violation of the ceasefire agreement. Vice President JD Vance also said Iran would face “serious consequences” if it broke its commitment under the deal.

The Kospi may continue to draw support from the ceasefire-driven relief rally, though concerns over an unstable truce are likely to keep investors cautious. Han Ji-young, an analyst at Kiwoom Securities, said negotiations could see repeated progress and setbacks through the July 22 ceasefire deadline. Because neither side wants a prolonged war, he said, investors need to reduce their sensitivity to market volatility triggered by the conflict.

Kang Jin-gyu, Hankyung reporter, josep@hankyung.com