The Korean stock market surged on hopes of an end to the U.S.-Iran conflict, but analysts are warning investors against premature optimism. Market experts advise confirming "real-world indicators" of actual geopolitical risk reduction rather than relying on political rhetoric.
The Korea Composite Stock Price Index (KOSPI) closed at 5,478.70 on Wednesday, up 426.24 points or 8.44% from the previous session. The index opened more than 5% higher and soared as much as 9% intraday to reach 5,510.74. A buy-side sidecar — an automatic trading halt triggered by rapid gains — was activated shortly after the opening bell.
The rally was driven by a sharp improvement in investor sentiment after both the U.S. and Iran signaled willingness to end hostilities. U.S. President Donald Trump said he was willing to pursue peace even if the Strait of Hormuz remained closed. Iranian President Masoud Pezeshkian responded that Iran "is ready to end the war if essential conditions are met to ensure aggression is not repeated."
However, the financial investment industry cautioned that the rebound is based on expectations, making it premature to count on further gains.
"It is paramount to refrain from preemptive bets based on unconfirmed expectations," said Kim Seok-hwan, a researcher at Mirae Asset Securities (006800.KS). He stressed that key indicators for judging whether risks have actually been resolved include: "the flow of oil tankers through the Strait of Hormuz, changes in maritime insurance premiums, stability of energy prices, and shifts in military activity by Iran's Revolutionary Guard Corps."
"The market is currently reflecting expectations of risk mitigation, not risk resolution. Geopolitical risks are likely to persist in altered forms rather than disappear entirely," Kim added. "This is a phase that calls for strategic patience and sophisticated risk management rather than chasing rallies."
On the supply-demand front, institutional investors led the market's advance. Institutions net purchased 4.0283 trillion won on the KOSPI, while retail investors net sold 3.7632 trillion won and foreign investors net sold 612.6 billion won. The financial investment sector alone accounted for 3.4338 trillion won in large-scale net purchases.
By sector, construction (up around 12%), electrical and electronics (up around 11%), and manufacturing (up around 9%) posted sharp gains. Metals and machinery (up around 8%), securities (up around 7%), and transportation equipment and parts (up around 6%) also rose across the board.
Among the largest stocks by market capitalization, Samsung Electronics (005930.KS) and SK hynix (000660.KS) surged approximately 13% and 10%, respectively, leading the index higher. Hyundai Motor (005380.KS) and Doosan Enerbility (034020.KS) gained 8–9%, while major financial and biotech stocks advanced 4–7%.
The KOSDAQ, Korea's tech-heavy secondary exchange, also posted strong gains. The index closed at 1,116.18, up 63.79 points or 6.06% from the previous session. A buy-side sidecar was activated during the session as well.
On the KOSDAQ, foreign and institutional investors net purchased 443.9 billion won and 460.2 billion won, respectively, while retail investors net sold 900.6 billion won. Among top KOSDAQ stocks by market capitalization, EcoPro reclaimed the top spot with a gain of around 6%. Lino Industrial, ISC, and Wonik IPS also rallied sharply. In contrast, Samchundang Pharmaceutical, which hit the daily lower limit the previous session, fell around 10%.
Meanwhile, the won-dollar exchange rate on the Seoul foreign exchange market closed weekly trading at 1,501.3 won per dollar, down 28.8 won from the previous session.
