The Kospi Composite Index jumped by nearly 10% today, June 12, and moved closer to the all-time high. It jumped to KRW 8,430, a few points below the record high of KRW 8,925. This article highlights the top reasons behind the rally in South Korean stocks.
Kospi Index jumps after President Trump’s statement on Iran
The Kospi Composite Index surged, mirroring the performance in global stocks. In the United States, the Dow Jones, Nasdaq 100, and S&P 500 indices jumped by over 1.75%.
Similarly, other global indices like the Hang Seng, Shanghai, and NIFTY 50 also resumed rising on Friday.
The rally is happening after President Trump sent mixed signals on the Iran war. In his first statement on Thursday, he warned that he was planning a major assault against Iran, including taking Kharg Island, where Iran exports over 90% of its oil.
Such a move would mark a major escalation, leading to higher crude oil prices as Iran has vowed to respond more harshly. For example, Iran can hit all major energy plants in the region, including in countries like Saudi Arabia, Qatar, and Kuwait.
Iran also has tools in place to shut down the Red Sea, where 12% of oil passes through. It can do that directly by launching attacks against ships, and also by using Houthis. Just this week, Yemen warned that it would block all Israeli-linked ships from entering the region.
Trump then changed his mind on Thursday and said that he had canceled his planned attacks. He also said that the US and Iran were close to a deal that will be signed in Europe as soon as this week.
To be clear: this is not the comprehensive deal that Trump has always wanted. Instead, it is a deal to start nuclear talks and reopen the Strait of Hormuz. A comprehensive Iran deal will be negotiated after that, with Trump keen on having a better one than the JCPOA.
A deal that reopens the Strait will be good for South Korea as it would lower crude oil pricesand inflation.
Technology stocks lead ahead of the SpaceX IPO
The Kospi Index is also rising as investors wait for the upcoming SpaceX IPO, which is set to happen later today. The company has already raised over $75 billion in assets, with reports suggesting that it has received orders worth four times than that. In its first report, Oppenheimer boosted its target for the stock, pointing to this demand.
As a result, technology companies have done well today. Samsung Electronics, the biggest South Korean company by far, jumped by 12%. SK Hynix jumped by 8%, with its market cap nearing the $1 trillion mark.
SK Square, which owns a large stake in SK Hynix, jumped by 13%. The other top gainers were companies like Hyundai Motor, Samsung Life Insurance, Samsung C&T, and KB Financial.
Kospi Composite Index technical analysis
Kospi Index chart | Source: TradingView
The daily chart shows that the Kospi Index has jumped in the past few days. It has moved above the ascending trendline that connects the lowest swings since May 4 this year.
The index has also held steady above the 50-day and 100-day Exponential Moving Averages (EMA). It jumped above the Ichimoku cloud indicator.
Therefore, the most likely scenario is where it continues rising, potentially to the year-to-date high of KRW 8,925. A move above that level will point to more gains, potentially to the key resistance at KRW 10,000.
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