South Korea's benchmark Korea Composite Stock Price Index (KOSPI) surged 338.12 points, or 5.12 percent, to a fresh record high of 6,936.99 on Monday, 4 May, as investors piled into semiconductor stocks while monitoring developments in US-Iran peace negotiations. The Korean won also strengthened sharply against the US dollar, hitting its highest level since late February.

Key Market Movements

Trade volume was exceptionally heavy, with 864.3 million shares worth 41.3 trillion won (approximately US$28.2 billion) changing hands. Despite the index's strong close, losers outnumbered winners 473 to 392, according to Yonhap news agency. Foreign investors were net buyers of 3 trillion won worth of local shares, while institutions purchased a net 1.9 trillion won. Retail investors, by contrast, were net sellers, offloading a net 4.8 trillion won.

What Drove the Rally

The index opened 2.79 percent higher after US President Donald Trump announced a plan to guide ships uninvolved in the Iran conflict through the Strait of Hormuz as a "humanitarian gesture" starting this week. A senior Iranian official subsequently warned that Tehran would consider any US interference in the strait a ceasefire breach, introducing fresh uncertainty. Nevertheless, the KOSPI extended its gains through the afternoon, underpinned by continued foreign and institutional buying.

Lee Kyung-min, an analyst at Daishin Securities, said: "Tech shares were driven by gains on Wall Street over the weekend. Also, foreign investors expanded their net purchase ahead of the market closure for Children's Day on Tuesday."

Semiconductor Stocks Lead the Charge

Chip stocks were the standout performers. Samsung Electronics jumped 5.44 percent to 232,500 won, while chipmaking rival SK Hynix surged 12.52 percent to a fresh record high of 1.4 million won, surpassing 10 trillion won in market capitalisation for the first time. Chip equipment maker Hanmi Semiconductor rose 2.72 percent to 378,000 won, and Samsung Electro-Mechanics soared 10.34 percent to 918,000 won.

Defence shares also posted gains, with Hanwha Aerospace advancing 3.39 percent to 1.4 million won and LIG D&A gaining 4.46 percent to 983,000 won. Hyundai Motor climbed 1.51 percent to 539,000 won, and LG Energy Solution added 2.5 percent to 472,000 won. Bio stocks, however, bucked the trend — Celltrion fell 1.35 percent to 197,800 won and Samsung Biologics dropped 2.58 percent to 1.4 million won.

Won Strengthens, Bonds Slip

The Korean won was quoted at 1,462.8 won per US dollar at 3:30 pm local time, up 20.5 won from the previous session — its strongest close since 27 February, when it ended at 1,439.7 to the greenback. Bond prices closed lower as yields ticked up: the three-year Treasury yield added 2 basis points to 3.615 percent, while the five-year government bond yield gained 1.7 basis points to 3.797 percent.

Context and What's Next

The KOSPI first crossed the 5,000-point mark in late January and broke through 6,000 in February, before recouping March losses that followed the outbreak of the US-Iran war in late February. The index is now approaching the uncharted 7,000-point level, fuelled by sustained optimism over the AI boom and hopes for the reopening of the Strait of Hormuz. Whether the index can consolidate above 6,900 will depend heavily on the trajectory of US-Iran diplomacy and the next round of Wall Street tech earnings.