South Korean stocks jumped as investors piled back into the country’s chipmakers after President Donald Trump signaled a potential deal with Iran, boosting risk sentiment.
The benchmark Kospi Index gained 4.6% on Friday, led by Samsung Electronics Co. and SK Hynix Inc., as investors rotated back into companies viewed as core AI beneficiaries. Up 93% this year, Korea’s chip rally has made its equities market into the world’s best performing.
Friday’s advance mirrored a broader regional rally after Trump abruptly pulled back threatened military strikes against Iran. Foreigners, who had sold $83 billion in Kospi stocks this year through Thursday, turned net buyers.
Samsung Electronics and SK Hynix account for over half of the Kospi’s market value, leaving the index highly exposed to shifts in semiconductor sentiment. The rise of leveraged exchange-traded funds tied to the two chipmakers has further amplified volatility, driving some of the sharpest swings among major equity benchmarks.
That dynamic has been playing out this week, with the Korea Exchange repeatedly triggering safeguards, including a 20-minute circuit breaker on Monday, as markets swung between gains and losses. The sensitivity was evident again on Friday, when program buying was briefly halted as Kospi futures surged.
Against that backdrop, Samsung jumped 7.9% Friday while SK Hynix gained 2.3%, paring earlier gains of around 10% after Bloomberg News reported · that global banks are curbing hedge funds’ leveraged bets on the chipmakers amid concerns over a potential pullback.
Vincent Li, head of derivatives at Fidelity International, said he was surprised markets haven’t yet seen major dislocations despite the extreme volatility, noting the Kospi’s volatility level of 90 compared with S&P’s about 20. “We are worried what this level of extreme market volatility will mean for retail investors, especially the ones that are on margin,” he added.
Those concerns come as leverage has surged, with margin loans for stock purchases rising to 36.8 trillion won ($24.2 billion) on June 10, well above the three-year average of 21.4 trillion won, according to Korea Financial Investment Association data.
READ: Morgan Stanley Lifts Kospi Target to 9,000 on Retail Strength
Still some see the longer-term picture as more stable. “The fundamental outlook and the structural strength of Korea’s tech suggest that the position of Korea’s role in memory semiconductors is hard to be replaced anytime soon,” said Indrani De, global head of investment research at FTSE Russell.
Some consultants have pointed to continued large spending that has supported sentiment.
Gartner Inc.’s January forecasts for worldwide AI spending of $3.3 trillion in 2027 points to strong near-term demand, while McKinsey & Co.’s March estimate that global data-center spending may reach $7 trillion by 2030 underscores the longer-run growth runway.
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