South Korean stocks experienced a significant surge on Wednesday morning following the agreement between the United States and Iran on a two-week ceasefire and the reopening of the Strait of Hormuz. The Korea Composite Stock Price Index (KOSPI) climbed by 5.94 percent, gaining 326.12 points to reach 5,820.9 by 11:20 am local time. Market activities were temporarily halted earlier as the bourse operator activated a buy-side sidecar, pausing program-driven buy orders in KOSPI futures.
In response to the ceasefire proposal, U.S. President Donald Trump announced a suspension of attacks on Iran for two weeks, contingent on Tehran agreeing to the immediate and safe opening of the vital strait. Iran’s foreign ministry accepted the proposal, emphasizing that safe passage through the strait would be feasible through coordination with Iran’s Armed Forces and considering technical limitations. Notably, Samsung Electronics and SK hynix saw significant increases of 7.12 percent and 9.5 percent, respectively.
The construction sector also saw positive movement, with companies like Daewoo Engineering & Construction rising by 27.95 percent and Hyundai Engineering & Construction by 13.34 percent, driven by potential opportunities in Iran’s reconstruction. Conversely, oil refiners faced losses as global crude prices declined post-ceasefire, with SK Innovation dropping by 2.96 percent and S-Oil by 2 percent. Defence shares, including Hanwha Aerospace and Hyundai Rotem, were among the losers, experiencing declines of 5.14 percent and 3.32 percent, respectively.
By 11:20 am, the local currency was trading at 1,478.8 won against the greenback, marking a 25.4 won increase from the previous session. Additionally, the South Korean government pledged efforts to assist Korean vessels stranded in the Strait of Hormuz in safely navigating the passage, following the agreement between the U.S. and Iran for a two-week ceasefire and full reopening of the crucial oil route. The Ministry of Trade, Industry and Resources, in collaboration with the foreign and oceans ministries, aims to ensure the secure and prompt passage of Korean oil tankers currently held up at the Hormuz strait.
