Retail investors split as US-Iran war jolts Korean stock market
A sign paying tribute to Iran's late Supreme Leader Ayatollah Ali Khamenei is displayed on a street in Tehran, Iran, Wednesday, after he was killed in Israeli and U.S. strikes Saturday. Reuters-Yonhap
A recent post on Blind, an anonymous online community used by office workers, captured the mood among retail investors. “Investing is so simple. This month, I should sell all my semiconductor stocks and just buy defense and oil shares,” one user wrote.
The writer claimed to have generated stronger-than-expected gains after shifting into defense contractors and refiners in the wake of the joint U.S.-Israeli strikes on Iran on Saturday.
Similar comments followed, with some predicting that defense stocks would further surge amid geopolitical tensions sparked by U.S. President Donald Trump’s actions.
In contrast, investors exposed to large-cap chipmakers expressed regret as share prices plunged.
“As soon as I bought SK hynix, war broke out,” one user wrote.
With the confrontation between Washington and Tehran unsettling Korea’s equity market, sector performance has diverged sharply, producing starkly different outcomes for individual investors.
Data from the Korea Exchange showed that the KOSPI ended Tuesday at 5,791.91, down 452.22 points, or 7.24 percent, from the previous trading day. On Wednesday, the benchmark fell further, plunging 698.37 points, or 12.06 percent, to close at 5,093.54.
Although the KOSPI posted a steep decline, sector differentiation was pronounced.
Shares of defense manufacturers, including LIG Nex1, Hanwha Systems, Hanwha Aerospace and Hyundai Rotem, advanced on expectations of increased demand amid heightened geopolitical risks.
LIG Nex1 and Hanwha Systems each surged about 29 percent on Tuesday, before retreating 6.35 percent and 20.93 percent, respectively, the following day.
Energy and shipping stocks, including S-Oil, also moved higher.
By contrast, airline and travel-related shares were hit hard as surging global crude prices and currency volatility amplified cost pressures. On Tuesday, Korean Air and Jeju Air fell 10.32 percent and 7.72 percent, respectively, and remained under pressure the following day, declining an additional 7.94 percent and 9.96 percent.
Despite the broader downturn, some investors viewed the correction as an opportunity to accumulate fundamentally solid stocks at lower valuations.
A 33-year-old office worker in Seoul said he had invested additional funds in Samsung Electronics, expressing confidence that the current weakness would eventually give way to a rebound.
Market analysts warn that if Middle East tensions escalate further, the domestic stock market could enter a prolonged downturn. However, they add that unless the core fundamentals of major corporations — particularly semiconductor firms — are materially damaged, the broader market could resume its upward trajectory after a period of short-term volatility.
“Although geopolitical flashpoints such as the Iran conflict could heighten near-term volatility, there remains room for further gains if rate cuts and expansionary fiscal policies in the United States, China and Korea begin to take effect in earnest,” Lee Kyung-min, an analyst at Daishin Securities, said.