South Korean Stock Market Emerges Strong Amid U.S.-China Truce Talks and Tech Sector Gains

The South Korean stock market experienced a notable rally, driven by improved investor sentiment thanks to hints at easing tensions between the U.S. and China and robust momentum among U.S. tech stocks. Fuelled by a surge in artificial intelligence (AI) and semiconductor-focused investing, both retail traders and institutional players actively participated in a buying spree. The benchmark Kospi Index made strong gains to surpass the 3,900 threshold during intraday trading.

As of 9:45 a.m. local time on the 23rd, the Kospi was soaring, reported at 3,904.28—up 58.72 points or 1.53% compared to the previous session’s close. The day began with the index opening at 3,893.23, marking a 47.67-point (1.24%) rise from its prior closing level of 3,845.56, and maintained upward momentum to break through the 3,900 mark during trading.

Institutional and Retail Activity Bolster Growth Despite Foreign Selling

Institutional investors significantly contributed to the day’s gains, net purchasing equities worth 136.6 billion won, while foreign investors added to the buying spree with 55.1 billion won. On the other hand, retail investors shifted to profit-taking, selling shares valued at 186.1 billion won.

Han Ji-young, an analyst at Kiwoom Securities, explained, “Optimism surrounding the upcoming U.S.-China summit on October 30, announced by the White House, coupled with expectations for the Federal Reserve to potentially end its quantitative tightening (QT) this month, has energized global equity markets.”

Highlighting strength in AI and semiconductor stocks, Han added, “Intel reported surprising earnings after the market closed, leading to a surge of more than 7% in after-hours trading. Even previously underperforming thematic stocks staged a comeback.”

Sector-Wide Performance Overview

Across sectors, the majority recorded gains, while transportation equipment & parts (-0.59%), retail (-0.20%), warehousing & transportation (-0.62%), and entertainment & culture (-0.36%) posted slight declines. The securities sector took the lead, climbing 2.93%, followed by manufacturing (+1.52%) and precision medical devices (+0.77%).

In individual stock movements, most major market-cap stocks posted gains, though Hanwha Aerospace fell 3.81%. Semiconductor giant SK Hynix recorded an impressive climb of 5.1% to close at a record high of 504,000 won, while Samsung Electronics saw a 1.76% increase, and LG Energy Solution advanced 2.12%.

Han elaborated, “Although the Kospi briefly touched the 3,900 mark in the previous session, volatility within the semiconductor sector remains prevalent. Challenges such as the rising won-dollar exchange rate continue to loom. However, the strong performance of U.S. semiconductor stocks should provide sufficient tailwinds to sustain and consolidate gains crucial for firmly establishing the index above the 3,900 level.”

Anticipation for Economic Data Impact on Markets

Looking ahead, upcoming U.S. economic data will likely play a crucial role in determining the market’s short-term trajectory. According to Han, “The delayed September Consumer Price Index (CPI), postponed due to the U.S. government shutdown, is anticipated later tonight. Unless extremely unfavorable data emerges, the prevailing positivity in markets is expected to remain undisturbed. This could solidify prospects for a rate-cut decision in the Federal Open Market Committee (FOMC) meeting scheduled for October.”

Kosdaq Index Marches Higher with Local Investor Support

The Kosdaq Index, South Korea’s market for smaller and growth-oriented firms, also enjoyed gains, climbing 5.25 points (0.60%) to reach 877.28 during morning trading. Opening stronger at 880.61—a rise of 8.58 points (0.98%) over the previous close—the index sustained its upward momentum.

Retail and institutional investors propped up the Kosdaq, net purchasing stocks valued at 98.5 billion won and 7.8 billion won, respectively. While foreign investors remained net sellers, offloading shares worth 101.2 billion won, domestic buying helped offset the negative impact.

Sector Dynamics in the Kosdaq

The electronics (+2.17%), machinery & equipment (+0.82%), and entertainment & culture (+0.16%) sectors spearheaded gains in the Kosdaq market, while metals (-0.30%) and other manufacturing (-0.54%) lagged.

Among major stocks in the Kosdaq benchmark, EcoProBM witnessed a significant surge of 5.52%, EcoPro climbed 2.94%, and HLB advanced by 1.69%. On the opposite end, Alteogen slipped by 0.66%, and Peptron edged down 0.19%.

Currency Market Reaction to Renewed Stability

The foreign exchange market mirrored the stability seen in the equity markets, with the won-dollar exchange rate opening at 1,436.7 won—down 2.9 won compared to the prior session’s closing value of 1,439.6 won. This slight drop suggests growing confidence among market participants, partially spurred by improved hopes for U.S.-China relations and a potentially dovish approach from the Federal Reserve.

The overall bullish sentiment in the South Korean financial markets underscores the far-reaching implications of geopolitical stability and favorable sector performance. Investors remain optimistic as major economic events loom, eyeing further gains backed by domestic resilience and global tailwinds.