KOSPI surges over 3% amid easing Middle East tensions

On June 24, 2025, South Korea experienced a significant rise in its benchmark stock index, KOSPI, which climbed almost 3% to surpass the 3,100-point mark. This marked the first time in 45 months that the index reached this level. The previous instance was on September 28, 2021. This surge came after U.S. President Donald Trump announced a cease-fire agreement between Iran and Israel, which helped to calm investors' nerves in South Korea and likely contributed to stronger market confidence. The increase in the KOSPI was underscored by notable foreign investor activity, with recorded net purchases reaching $320 million. The market capitalization of SK hynix, which is South Korea’s second-most valuable company, saw a remarkable jump of 7.32% due to robust sales of its high-bandwidth memory chips utilized in artificial intelligence and supercomputing applications. The overall market momentum has been further bolstered by a series of economic measures and stimulus policies proposed by the new administration under President Lee Jae Myung, who took office on June 4, 2025. Since the new administration's inauguration, the KOSPI has surged by 15%, indicating its commitment to enhancing the economy through various initiatives, including supplementary budgets. Analysts expect that the positive trends in the market could lead the KOSPI to approach its historic high of 3,316.08 points, recorded on June 25, 2021. Both the U.S. and South Korean governments are anticipated to inject more liquidity into the market. Analysts, including Kim Young-hwan from NH Investment & Securities, support this view, suggesting that interest rate cuts will result in more investments and improved market conditions. They foresee that the government’s efforts to stabilize and stimulate the economy, along with the expected influx of capital, will reinforce the KOSPI’s upward trajectory in the near future. The dynamics observed within the Seoul stock exchange reflect the interconnectedness of global markets and the significant impact of geopolitical events. The immediate rebound following the cease-fire announcement illustrates how international relations can directly influence domestic economic conditions, especially in a country like South Korea, which is not only economically vibrant but also strategically positioned amidst regional tensions. Market participants remain cautious yet optimistic, anticipating further developments that could either bolster or challenge the current upward trend of the KOSPI as both local and foreign investors navigate this evolving landscape.