Kospi closes above 8,000 for first time as chip rally surges

The South Korean benchmark Kospi closed above 8,000 points for the first time Tuesday on expectations of an end to the war in Iran as Washington and Tehran inched closer to a deal. The index even soared past the 8,100 mark during intraday trading.

The Kospi closed at 8,047.51, up 2.55 percent from Friday's close, as markets were closed Monday for a public holiday. While the benchmark first breached the 8,000 level during intraday trading on May 15, Tuesday marked its first-ever close above the threshold.

During trading, the index extended gains to hit as high as 8,131.15, climbing past 8,100 for the first time.

Investor sentiment improved on expectations that the US and Iran could reach a ceasefire agreement, as the two countries signaled progress in efforts to resolve the conflict. Earlier, the two sides were reported to be close to extending the ceasefire by 60 days and signing a framework agreement aimed at reaching a final deal.

Institutional investors drove the index higher, net buying shares worth 910.3 billion won ($605 million), while retail and foreign investors offloaded a net 615.6 billion won and 184.3 billion won, respectively.

Foreign investors, who began the session as net sellers, briefly turned net buyers during trading before reverting to net selling by the close.

Chip heavyweights led the rally, each reaching fresh highs as strong buying momentum poured into memory chip giants ahead of the launch of leveraged funds tracking the two stocks on Wednesday.

Shares of Samsung Electronics rose 2.22 percent to 299,000 won. During trading, the stock reclaimed the 300,000 won mark and touched an all-time high of 302,000 won.

SK hynix gained 5.72 percent to 2.052 million won. The stock surpassed the 2 million-won mark for the first time during regular trading hours, touching a record high of 2.087 million won.

SK Square shed 0.34 percent to 1.181 million won, while Hyundai Motor advanced 5.19 percent to 689,000 won.

The secondary Kosdaq closed at 1,172.52, up 0.98 percent from the previous session.

The Korean won was quoted at 1,504.3 per dollar at the close of onshore trading, strengthening 12.9 won from the previous session.

Although foreign investors continued to pull funds from the local stock market, analysts said they could return as chip valuations improve.

“Despite broader foreign capital outflows across emerging markets recently, the Korean stock market has shown strong downside resilience as retail investors absorb selling pressure,” Kim Doo-un, an analyst at Hana Securities, said.

“In particular, valuation discounts long applied to Korea’s leading chipmakers as cyclical stocks are gradually fading, signaling the start of a rerating phase. Despite strong earnings growth, the stocks remain undervalued in terms of price-to-earnings ratios, creating room for foreign inflows to return.”