Kospi Reaches Record Intraday High Amid U.S.-South Korea Tariff Agreement; Kosdaq Falters Despite Initial Gains

The South Korean stock market showcased mixed performances as the benchmark Kospi index surged to a record intraday high buoyed by positive sentiment surrounding the U.S.-South Korea tariff resolution, while the tech-heavy Kosdaq experienced slight losses despite early gains.

Kospi Hits Historic Milestone

According to the Korea Exchange, as of 9:29 a.m. on October 30, the Kospi index was trading at an unprecedented 4,146.30 points, marking a 1.60% rise (65.15 points) from the previous close of 4,081.15. The benchmark index opened at 4,105.95, up 0.61% (24.80 points), and later shattered the 4,100 threshold for the first time.

The Kospi’s historic ascent was largely fueled by market optimism around the newly formalized U.S.-South Korea trade deal, which outlines strategic investments and tariff reductions.

Key Drivers Behind Kospi's Surge

Han Ji-young, a researcher at Kiwoom Securities, cited robust gains in blue-chip stocks like SK Hynix as a pivotal factor bolstering the Kospi's upward momentum. "Breaking past the 4,080 level, the index is now testing the 4,100 mark, though fluctuations are likely," said Han.

The trade deal was central to investor confidence. As part of the agreement, $1,500 billion out of a $3,500 billion investment package was designated for the Mars Project, with the remaining $2,000 billion approved as annual $20 billion disbursements. Funded via foreign currency asset returns, this strategic investment bolstered sentiment in the domestic market.

Retail investors played a key role in the Kospi's rally, purchasing shares worth 747.7 billion won, which provided significant support to the index. On the other hand, foreign investors sold stocks totaling 200.4 billion won, while institutions offloaded 486.1 billion won. Despite this selling pressure, these actions were insufficient to counteract the market’s upward trajectory.

Tariff Agreement Spurs Sector Gains

The U.S.-South Korea tariff deal triggered sector-specific rallies. Automobile tariffs were cut from 25% to 15%, and South Korean President Lee Jae-myung reportedly secured approval for the development of U.S. nuclear-powered submarines, according to social media updates by former U.S. President Donald Trump.

Industries directly benefiting from these tariff changes saw notable gains. Transport equipment surged by 3.85%, transportation and storage climbed 1.81%, and securities advanced 3.65%. In contrast, utilities (-2.15%), construction (-1.20%), and real estate (-0.28%) lagged.

Several blue-chip stocks stood out. Tech giant Samsung Electronics rose 3.38%, reaching 103,900 won, while SK Hynix gained 0.81%, trading at 562,500 won. Auto stocks performed exceptionally well, with Hyundai Motor leaping 6.40% to 274,500 won and Kia hitting an all-time high of 121,300 won, up 4.66%. Meanwhile, some companies experienced setbacks, such as Doosan Enerbility, which fell 4.46%. Samsung BioLogics remained in trading suspension.

Kosdaq Struggles Amid Mixed Sentiment

Despite opening strongly at 903.24, up 1.65 points (0.18%) from its previous close of 901.59, the Kosdaq later reversed gains, slipping 0.74 points (0.08%) to trade at 902.56 as of the same morning measurement.

Retail and institutional investors showed buying interest on the Kosdaq, purchasing shares worth 18.3 billion won and 3.7 billion won, respectively. However, foreign investors sold 10.9 billion won in shares, applying notable pressure on the index.

Han Ji-young highlighted the mixed market sentiment. “Although Microsoft, Alphabet, and Meta posted strong earnings, after-hours trading exhibited varied reactions due to heightened expectations fueling profit-taking. Despite this, these companies continue to prioritize capital expenditure (CAPEX) growth to cater to increasing AI-driven demand, which remains a compelling factor for investors to consider.”

Kosdaq sectors illustrated diverging performance patterns. General services (up 0.43%) and retail (0.30%) recorded gains, whereas chemicals (-0.92%) and paper & wood (-1.07%) weakened. Leading stocks showed varied movements, with Rainbow Robotics declining 0.87% and Peptron sliding 2.08%, while EcoPro (2.04%), HLB (4.27%), and Samchundang Pharm (2.05%) delivered positive results.

Currency Market Gains for the Korean Won

The currency market also showed strength for the Korean won against the U.S. dollar, reflecting broader economic optimism. The won-dollar exchange rate opened at 1,425.0, down by 6.7 won from the prior session's close of 1,431.7. The strengthening won further underscored the positive market response tied to the U.S.-South Korea trade pact.

Outlook and Final Thoughts

South Korea’s financial markets exhibited mixed but predominantly optimistic trends following the historic U.S.-South Korea tariff deal. The Kospi’s record-breaking performance and sector-specific rallies signal a buoyed market sentiment, while the Kosdaq faces challenges from external factors like fluctuating global expectations.

The strategic agreements, including advancements in tariffs and international collaborations, instill confidence in the market’s ability to maintain upward momentum. For investors, focusing on sectors directly benefiting from policy changes may yield promising opportunities amid evolving market dynamics.