South Korean Stocks Have Best Day in Nearly Two Decades After Record Plunge -- Update

By Kwanwoo Jun

South Korean equities had their best day in nearly two decades, recovering from their record slide the previous session, as bargain hunters swooped in following panic over the Iran conflict and rising energy prices.

The benchmark Kospi surged 9.6% to close at 5583.90 on Thursday, its largest one-day gain since October 2008. That marked a swift, sharp rebound from Wednesday's 12% plunge--its steepest-ever drop.

Helping buoy sentiment were Wall Street's gains overnight as investors set aside some fears over the Middle East conflict. Analysts said traders also appeared to view the latest selloff as overdone.

Han Ji-young of Kiwoom Securities said the plunge was excessive even based solely on the pace of decline in local stocks. "At this point, reducing your stock holdings doesn't offer much benefit," the analyst said in a note.

Concerns about higher oil prices and the broader impact of the Middle East conflict on energy-reliant South Korea prompted investors to book profits after the recent strong rally in Korean stocks, fueling the sharp selloff earlier this week.

Still, valuations of local chip stocks, which led the Kospi rally amid the global artificial-intelligence boom, remain intact, Han said.

Some analysts now see a buying opportunity following the rout.

UBS Global Wealth Management's Chief Investment Office upgraded South Korean equities to attractive, saying the roughly 20% Kospi correction reflects "technical unwinds rather than a deterioration in fundamentals" and offers scope for dip buying.

"Current valuations are now more compelling," UBS said, noting that higher DRAM chip prices amid supply shortages should support robust earnings growth for Korean semiconductor makers.

"Importantly, this momentum is not just a short-term phenomenon, but is being driven by structural trends such as the global buildout of AI infrastructure, digital transformation and South Korea's leadership in advanced manufacturing," it said.

UBS said it expects DRAM spot prices to nearly double to $1.7 per gigabit by the second half of 2027.

The Kospi surged 76% in 2025 and remains more than 30% higher this year despite its recent volatile trade.

In Thursday trading, chip and auto stocks were among the biggest gainers, with index heavyweight Samsung Electronics surging 11% after slumping by a similar margin in the previous session. Its local memory-chip rival, SK Hynix, also soared 11%, and Hyundai Motor advanced 9.4%.

The local stock-market operator, Korea Exchange, briefly suspended trading to cool volatility following sharp gains in both the main Kospi and the smaller tech-heavy Kosdaq markets.

The Korean won strengthened against the dollar amid renewed risk-on sentiment, driven spurred by overnight gains on Wall Street. The greenback was at 1,468.10 won, down from 1,476.20 won in Seoul onshore trading late Wednesday.

Write to Kwanwoo Jun at [e-mail]

(END) Dow Jones Newswires

03-05-26 0232ET