The KOSPI surged 8% and settled at the 5,460 level. In a month of wild volatility swinging between "heaven and hell," it is on the verge of reclaiming the 5,500 mark. Hopes for an end to the war between the United States and Israel on one side and Iran on the other eased macro headwinds, and record March semiconductor exports spotlighted the fundamentals of corporations. In the market, more than 4 trillion won in net institutional buying flowed in, lifting the index.
On the 1st, the KOSPI ended at 5,480.46, up 428 points (8.47%) from the previous trading day. After barely holding the 5,000 level the day before, the index soared and crossed 5,400 in a day. Samsung Electronics jumped 13%, and SK hynix also surged 10%.
Expectations for an end to the war between the United States and Iran grew, with hopes that the geopolitical risks weighing on Korea's stock market will ease. Earlier, U.S. President Donald Trump offered a dovish note, saying "we could end military operations within the next two to three weeks," and Iran's president also said the country was "ready to end the war if there is a guarantee that attacks by the United States and Israel will not recur."
In particular, Trump said he would deliver a national address on the Iran war at 10 a.m. on the 2nd. There was no specific mention of the content, but given the more dovish tone from both leaders in the United States and Iran, the market is betting on the possibility of an end to the war. On Polymarket, the world's largest betting site, the probability of an end to the war between the United States and Israel on one side and Iran on the other rose 13 percentage points from the previous day to 38%.
Record-breaking results from semiconductors, which are leading Korea's stock market, also appeared to rekindle confidence in the fundamentals of corporations and spur investor sentiment. According to the "March 2024 export and import trends" that the Ministry of Trade, Industry and Resources released the same day, semiconductor exports surged 151.4% from a year earlier to $32.83 billion, topping $30 billion for the first time and marking the highest monthly level on record. Memory prices remained elevated, AI server investment expanded, and demand for general servers increased.
On the supply-demand side, strong net buying by institutions pushed the index higher. Institutions recorded net purchases of 4.0011 trillion won. Specifically, exchange-traded fund (ETF) inflows were 3.4328 trillion won, and investment trusts 298.9 billion won. A securities firm analyst who requested anonymity said, "Institutions are continuing net buying across all sectors," adding, "As short-covering demand to close short positions has increased, the strength of buying may have intensified."
Foreigners' net selling also eased somewhat. Foreign investors were net sellers of 594.7 billion won in the cash market, but the intensity was weaker than the previous day's 3.8 trillion won. In the KOSPI 200 futures market, they were net buyers of 1.7769 trillion won, showing a combined net buying stance across cash and futures. However, foreigners have been net sellers in the cash market for 10 consecutive trading days.
Along with hopes for an end to the war, Korea's inclusion in the World Government Bond Index (WGBI) on the day appeared to support stocks as government bond yields fell and the won-dollar exchange rate stabilized. Yields on 3-year and 10-year Treasury bonds fell to around 3.44% and 3.80%, respectively, and the won-dollar rate eased below 1,510 won.
Jeong Hae-chang, an analyst at Daishin Securities, said, "With a series of positives including hopes for an early end to the Iran war and stabilization in exchange rates and interest rates, all sectors were strong," adding, "If geopolitical risks are resolved, the market's recovery momentum will be further reinforced on the back of domestic policy and earnings momentum."