# South Korean Equities Gain Momentum on Foreign and Institutional Buying Amid Optimism Around U.S.-Japan Trade Deal

South Korean stocks edged higher on Monday, buoyed by strong foreign and institutional buying. Market sentiment surged following the announcement of a trade agreement between the United States and Japan, which introduced significant tariff reductions and spurred optimism in the domestic market.

According to the Korea Exchange, the benchmark KOSPI index climbed 13.83 points (0.44%), closing at 3,183.77. The index opened strong at 3,189.65, up 19.71 points (0.62%) from its previous session’s close of 3,169.94, and maintained upward momentum throughout the day.

On the main board, individual investors emerged as net sellers, shedding 682.5 billion won worth of shares. However, institutional investors and foreign investors boosted market activity by net buying 292.3 billion won and 315.8 billion won, respectively, underpinning the day’s advances.

# Sector Performance: Transportation, Metals, and Utilities Shine

The majority of KOSPI sectors posted gains, with transportation equipment and components leading the way, up 1.86%. Following closely were metals (+1.71%), utilities (+1.62%), machinery and equipment (+1.61%), and transportation and storage (+1.54%). Other strong performers included pharmaceuticals, retail, and electronics, which also closed in positive territory.

On the downside, some sectors lagged behind the broader market. Paper and wood products experienced the steepest loss, falling 2.44%, while IT services dropped 1.99%. Other decliners included entertainment and cultural businesses (-1.42%), securities (-1.21%), telecommunications (-1.20%), and textiles and apparel (-1.09%).

# Mixed Results for KOSPI Heavyweights

KOSPI-index heavyweights saw a mixed performance. Key players such as Samsung Electronics advanced 0.61%, and SK Hynix edged up by 0.19%. Notable gains were recorded by LG Energy Solution (+0.90%) and Samsung Biologics (+2.11%). Automaker stocks led the pack, with Hyundai Motor soaring 7.51% and Kia Motors surging 8.49%. Meanwhile, Doosan Enerbility also moved higher, gaining 1.28%.

Conversely, Hanwha Aerospace closed in the red as its stock price slipped by 1.30%.

# U.S.-Japan Trade Agreement Stokes Positive Sentiment

Market confidence was bolstered by the announcement of a finalized trade agreement between the United States and Japan. Revealed on Sunday, the deal reduces mutual tariffs, with the U.S. lowering its tariffs on Japanese imports from 25% to 15%. U.S. President Donald Trump emphasized Japan’s willingness to open up its automotive and agricultural markets as a cornerstone of the agreement.

The deal sparked hopes that South Korea could strike a similar agreement, potentially offering domestic exporters a competitive boost with reduced tariffs. However, analysts pointed out that optimism could dim if South Korean automakers face tariffs higher than Japan’s 15%, thereby increasing competitive pressures in key markets.

Shares of Hyundai Motor and Kia Motors, which are preparing to release their second-quarter earnings this week, surged on the back of this positive momentum, registering significant gains of over 7% and 8%, respectively.

# KOSDAQ Edges Higher Despite Foreign Selling Pressure

The broader tech-heavy KOSDAQ index also closed in positive territory. The index gained 0.59 points (0.07%) to finish at 813.56 after opening at 815.88, up 2.91 points (0.36%) from its prior session's close of 812.97. However, gains were somewhat constrained by ongoing foreign selling pressure.

On the KOSDAQ, retail investors emerged as net buyers, scooping up 146.9 billion won worth of shares. On the flip side, foreign investors and institutional investors offloaded stocks, selling a net 32.4 billion won and 107.2 billion won, respectively.

# Sector and Stock Highlights on the KOSDAQ

Sector-wise, paper and wood led the gainers on the KOSDAQ, rising 3.64%, followed by pharmaceuticals (+2.55%), other securities (+2.24%), and the KOSDAQ 100 index (+0.65%). Gains were also observed in transportation equipment and components (+0.57%) and metals (+0.46%).

Conversely, telecommunications led the decliners, slumping 3.79%. Other lagging sectors included other manufacturing (-2.45%), entertainment and cultural stocks (-1.88%), IT services (-1.31%), and construction (-0.85%).

Among top-performing KOSDAQ stocks, Alteogen added 0.63%, HLB climbed 0.40%, Pharmaresearch gained 1.92%, and Hugel rose by 0.72%. Meanwhile, Rainbow Robotics dipped 0.56% and Peptron dropped 0.84%.

# Currency Market: South Korean Won Gains Against U.S. Dollar

In the foreign exchange market, the South Korean won strengthened against the U.S. dollar. The won-dollar exchange rate dipped by 8 won, closing at 1,379.8, reflecting improved confidence in the local currency amid bullish market sentiment.

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In the coming days, investors will closely monitor global trade developments and upcoming earnings reports. These factors are expected to play a pivotal role in shaping the direction of South Korean equities in the near term.