PiCK

Middle East Tensions Return to Focus as Investors Watch Whether Kospi Can Hold 6,500

Source

Korea Economic Daily

Summary

Amid rising Middle East tensions between the U.S. and Iran, investors are closely watching whether the Kospi can hold above 6,500.
Momentum from the first-quarter semiconductor earnings season has largely been priced in, and the market is entering the final phase of its first rally.
Investors should also watch for spreading risk aversion tied to Middle East tensions and whether net buying in semiconductor stocks will continue.

Forecast Trend Report by Period

U.S. stocks turned lower on April 22 as Washington and Tehran escalated their standoff over control of the Strait of Hormuz. South Korean equities, meanwhile, have hit record highs for three straight sessions, with the Kospi topping 6,500 during intraday trading on April 23. Investors are now watching whether the rally can extend further or pause.

The Kospi closed 0.9% higher at 6,475.81 on April 23, while the Kosdaq fell 0.58% to 1,174.81. The U.S. and Iran have raised military tensions after seizing each other's vessels in the Strait of Hormuz. President Donald Trump said on April 24 that he would not use nuclear weapons against Iran and was in no rush to negotiate with Tehran.

SK Hynix rose 0.16% to close at 1.225 million won after posting record first-quarter earnings on April 23. Samsung Electronics, the other heavyweight in South Korea's chip sector, climbed 3.22% to 224,500 won. Riding the artificial-intelligence data-center boom, infrastructure-related shares also advanced, including LS ELECTRIC, up 11.74%, Hyosung Heavy Industries, up 5.97%, and Doosan Enerbility, up 5.78%.

The three major U.S. indexes fell as geopolitical concerns in the Middle East resurfaced. The Dow Jones Industrial Average dropped 0.36% to 49,310.32, while the S&P 500 fell 0.41% to 7,108.40. The Nasdaq Composite rose 0.89% to 24,438.50. After the close, Intel reported first-quarter revenue of $13.58 billion, up 7.2% from a year earlier, and earnings per share of 29 cents. Both figures topped market expectations, sending the stock up about 18% in after-hours trading.

As of 8 a.m. Korea time on April 24, U.S. stock-index futures were little changed. Dow futures were down about 0.1%, S&P 500 futures were off about 0.4%, and Nasdaq futures were up about 0.3%.

According to Epic AI, a research and investment-information platform, there are three points for investors to watch in South Korea's stock market on April 24.

Can the Kospi hold above 6,500?

The Kospi briefly climbed above 6,500 during trading on April 23, but turned lower as foreign and institutional investors sold in tandem. Kim Ji-hyun, an analyst at Daol Investment & Securities, wrote that most of the momentum from the first-quarter semiconductor earnings season has already been priced in. The first leg of the rally is nearing its end.

Risk aversion spreads as Middle East tensions flare again

Reports that Tehran had reactivated its air defenses, along with comments from Israeli Defense Minister Israel Katz about preparing to resume the war, pushed more investors toward the dollar and U.S. Treasuries. South Korean stocks may also face greater volatility on April 24 as oil prices jump and geopolitical risks intensify.

Whether net buying in semiconductors can continue

A shift has emerged in which South Korean retail investors are selling U.S. stocks such as Nvidia and moving funds into domestic chipmakers including Samsung Electronics and SK Hynix. Kim Jae-seung, an analyst at Hyundai Motor Securities, said semiconductors and power-equipment makers would likely lead market gains through the first half of this year.

Lee Mi-a, Hankyung.com reporter mia@hankyung.com