South Korea's benchmark KOSPI surged nearly 6% last week as the month-long U.S.-Iran war entered a ceasefire negotiation phase.
The KOSPI rose 5.68% from 5,858.87 to 6,191.92 between June 13 and June 17, according to the Korea Exchange on Thursday.
Information technology (IT) and semiconductors led the gains. Based on the KRX index, which combines the KOSPI and KOSDAQ markets, IT rose 8.36%, followed by machinery and equipment at 6.42%, semiconductors at 6.38%, K-content at 6.10%, and automobiles at 5.35%.
The KOSDAQ climbed 6.99% last week from 1,093.63 to 1,170.04. The index has been on a winning streak for six consecutive trading sessions since June 10.
The United States and Iran held their first face-to-face negotiations on June 11-12 local time since the war began. The initial talks broke down over disagreements on the opening of the Strait of Hormuz and Iran's nuclear issues, sending the KOSPI down 0.86% on June 13, the following trading day. However, optimism about further negotiations spread, driving gains of more than 2% for three consecutive sessions from June 14 to June 16. On June 17, the index edged lower on profit-taking following the sharp rally and caution ahead of the second round of talks.
Market analysts expect technology and semiconductor stocks to face further upward pressure after the war ends. Although share prices paused due to geopolitical uncertainty, they have ample room to rally sharply on solid earnings once the war concludes, analysts said. Iran's Islamic Revolutionary Guard Corps closed the Strait of Hormuz from the evening of June 18 local time, raising tensions between the two countries again, but time remains before the ceasefire deadline.
"This year's KOSPI operating profit is expected to reach a record high of 866 trillion won, up 182% from a year earlier, driven by improved memory chip earnings at Samsung Electronics (005930.KS) and SK hynix (000660.KS)," said Kim Dong-won, head of the research center at KB Securities. "Considering the pace and scale of earnings improvement, the combined market capitalization of Samsung Electronics and SK hynix is estimated to be justified at more than 3,300 trillion won, with 2,000 trillion won for Samsung Electronics and 1,300 trillion won for SK hynix."
Lee Sung-hoon, an analyst at Kiwoom Securities, said, "The market will focus on whether the blockade of the Strait of Hormuz will be eased during the ceasefire negotiation process by June 22, when the two-week truce deadline expires. The continued AI investment by major hyperscalers, which will be revealed in the earnings announcements of Alphabet, Meta, Microsoft and Amazon later this month, is expected to be the key to the direction of technology stocks afterwards."
