KOSPI withstands US airstrikes on Iran as retail investors go on buying spree

An electronic board at Hana Bank's headquaters in Seoul shows the benchmark KOSPI closing at 3,014.47 points, Monday, down 7.37 points or 0.24 percent from the previous session. Yonhap

The benchmark KOSPI shook off a weak start and finished above the 3,000-point threshold for two straight sessions on Monday, despite U.S. airstrikes on Iran’s nuclear facilities raising concerns over investment sentiment.

The index ended at 3,014.47 points, losing 7.37 points or 0.24 percent from Friday, when it marked the first close above the 3,000 mark since Dec. 28, 2021.

Initial worries were that the U.S. airstrikes, which were carried out on Sunday, would take a heavy toll on investor sentiment. The KOSPI opened at 2,992.20 points, down 29.64 points, or 0.98 percent, from Friday’s close, and dropped to as low as 2,971.36 points before climbing back later in the session.

Seoul stocks were able to withstand the bad news from the Middle East as retail investors net purchased 1.37 trillion won ($997.32 million), while non-Korean nationals and institutions sold a net of 367.9 billion won and 951.1 billion won, respectively.

The Korean currency lost 18.7 won to close at 1,384.3 won per dollar on the daytime trading market Monday. It was the lowest level since May 21, when it closed at 1,387.2 won. The secondary bourse Kosdaq slid 6.74 points, or 0.85 percent, to finish at 784.79 points.

Woori Bank economist Park Hyung-jung said the stock market “fared better than expected considering heightened tension in the Middle East.”

He noted that the U.S. strikes and intervention in the war between Israel and Iran may make global financial markets more uncertain and unpredictable.

Chipmakers had a weak showing, as Samsung Electronics lost 2.52 percent and its cross-town rival SK hynix ticked up 0.97 percent amid pressure from the U.S. Donald Trump administration, which reportedly plans to restrict the supply of American-made equipment to the Chinese factories of Korean semiconductor companies.

The country’s No. 1 carmaker Hyundai Motor fell 4.05 percent, and its sister company Kia slid 2.84 percent.

Shipping companies were strong as the potential freight rate is expected to go up if Iran blockades the Strait of Hormuz, a globally critical oil shipping route. Heung-A Shipping gained 15.48 percent, while STX Green Logis climbed 12.27 percent, and HMM increased 2.39 percent.

Asked how U.S. intervention in the Iran-Israel conflict is expected to continue influencing the financial markets, Park said, “It will depend on the scale and severity of Iran’s retaliatory measures.”

Hana Bank researcher Seo Jung-hoon speculated that the Korean currency may weaken to 1,400 won against the dollar if Iran attacks U.S. military bases in the Middle East or blockades the Strait of Hormuz.

“More investors would go for safe haven assets as international oil prices and the relevant prices of goods will be largely affected,” he said.

The government said it is carefully monitoring how the U.S. airstrikes impact financial markets. On Monday, First Vice Minister of the Ministry of Economy and Finance Lee Hyung-il convened a joint emergency meeting among relevant ministries.

“The government remains on high alert, closely monitoring and responding to changes in international energy prices and supply-demand dynamics” Lee said.

Lee noted that the fuel tax cut was extended for another two months to cope with the potential crisis. He also said a special task force concerning the petroleum market “will rigorously crack down on any illegal activity that exploits rising oil prices.”