South Korean stocks surged more than 8 percent Tuesday in the largest single-day gain on record for the benchmark KOSPI index, rebounding sharply from the prior session’s steep decline as renewed confidence in artificial intelligence stocks and a ceasefire between Israel and Iran drew buyers back into the market.
The KOSPI added 612.52 points, or 8.18 percent, to close at 8,096.93 after rising as high as 8,119.09 in intraday trading. The point gain surpassed the previous record of 606.64 points set on May 21, when the index was rallying on an extended bull run of semiconductor shares.
The rebound came after the KOSPI slid more than 8 percent Monday on concerns about AI profitability and the possibility of a U.S. Federal Reserve rate hike following stronger-than-expected U.S. jobs data for May. News that Iran and Israel were trading strikes also dampened market sentiment, but investors’ risk appetite returned Tuesday after Israel and Iran halted attacks on each other following a warning from U.S. President Donald Trump.
“As the negative factors that had triggered the sharp market decline began to ease, investors engaged in bargain hunting, particularly in large-cap semiconductor stocks, which had recently suffered steep losses,” said Lee Kyoung-min, an analyst at Daishin Securities.
The broader U.S. trade-weighted dollar index stood at 120.08 as of June 9, while the South Korean won strengthened sharply, quoted at 1,512.1 won against the U.S. dollar at 3:30 p.m., rising 22.9 won from the previous session. The local currency gained ground after financial authorities issued a strong verbal intervention the previous day.
Samsung Electronics, the world’s largest memory chip maker, jumped 8.97 percent to 322,000 won, while its rival SK hynix shot up 15.91 percent to 2.2 million won. AI investment firm SK Square skyrocketed 13.51 percent to 1.27 million won, and Samsung Electro-Mechanics escalated 18.39 percent to 1.97 million won.
Overnight on Wall Street, the tech-heavy Nasdaq composite added 0.86 percent, with AI chip giant Nvidia gaining 1.73 percent and AMD advancing 5.14 percent on sentiment that business fundamentals of AI-related sectors remain strong. Micron surged 9.87 percent and SanDisk increased 5.3 percent.
Trade volume on the KOSPI was heavy at 442.4 million shares worth 46 trillion won, or about US$30.4 billion, with winners outnumbering losers 771 to 133. Institutions purchased a net 2.5 trillion won, while foreigners and retail investors unloaded local shares worth 2 trillion won and 618 billion won, respectively.
The Korea Exchange activated a buy-side sidecar for the KOSPI shortly after opening, halting program trading for five minutes. Program trading on the KOSDAQ was also suspended for five minutes from 9:28 a.m. after the bourse operator issued a buy-side sidecar for the secondary index.
The KOSPI 200 volatility index, or VKOSPI, surged more than 19 percent to close at a record high of 91.23, according to data from the Korea Exchange. The index was higher than when the U.S.-Iran war broke out earlier this year and also during the global financial crisis in 2008.
Bond prices closed higher, with the yield on three-year Treasuries shedding 8.4 basis points to 3.856 percent and the return on benchmark five-year government bonds dropping 8.8 basis points to 4.102 percent.
Analysts said the KOSPI may see continued volatility this week with the planned initial public offering of SpaceX, the earnings release of Oracle, and the release of the U.S. Consumer Price Index, which will give further clues on the Fed’s rate path.