The benchmark KOSPI index soared 660 points, or 8.5%, to close at 8,424 on Friday, driven by optimism over a potential peace agreement between the United States and Iran. This rally helped the index recover from a previous week's decline and positioned it as the world's top-performing stock index in 2026, with a year-to-date gain of 94%.
Technology stocks were at the forefront of Friday's gains, with Samsung Electronics climbing 12.21% and SK Hynix rising 8.85%. LG Energy Solution also saw a 6.11% increase. The automotive sector joined the rally, with Hyundai Motor advancing 6.03% and Kia Corp adding 4.81%. Steel producer POSCO Holdings gained 6.84%, while Samsung BioLogics edged up 1.01%.
The market rebound was influenced by former U.S. President Donald Trump's announcement on Thursday about the potential signing of a peace agreement with Iran, which could reopen the Strait of Hormuz to shipping. Trump stated that discussions had reached the highest levels of Iranian leadership and had received approval from multiple countries, including the United States, Israel, and Saudi Arabia.
The KOSPI's performance this week was marked by significant volatility, triggering 'sidecar' trading curbs in four sessions, including Friday. Earlier in the week, circuit breakers were activated for the third time this year, highlighting the market's turbulence amid a global selloff in AI and technology stocks.
Despite recent volatility, the long-term growth story for AI infrastructure remains strong, with increasing demand for high-bandwidth memory chips. South Korean chipmakers, crucial players in the global AI supply chain, continue to attract investor interest.
Background
The KOSPI index has been a standout performer in 2026, largely driven by the global demand for AI and semiconductor stocks. South Korea's significant exposure to the AI supply chain has positioned its market at the forefront of this trend, despite recent volatility.
Looking ahead, market participants will closely monitor developments regarding the potential U.S.-Iran peace agreement, which could have significant implications for global trade routes and market stability. The KOSPI's performance will also be watched for signs of sustained recovery or further volatility.
