People walking through the neon-lit night streets of Sinchon, in the heart of Seoul, the vibrant capital of South Korea.
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South Korea’s Kospi jumped more than 12% on Thursday, making a strong rebound from its worst session and on track to record its best day, LSEG data showed.
Index heavyweights SK Hynix and Samsung Electronics rose more than 15% and 14%, respectively. The South Korean won strengthened 0.14% and was last trading at 1,460.60 against the dollar.
The small-cap Kosdaq rose more than 11%.
On Thursday, the Korean Stock Exchange briefly halted trading on both the benchmark index KOSPI and the Kosdaq after the sharp rally.
The Kospi index had plunged 12% on Wednesday, its worst single-day drop.
South Korea’s stock market rally was largely driven by a reversal of leveraged selling, said Daniel Yoo, global market strategist at Yuanta Securities. “It has nothing to do with fundamentals,” he said.
A wave of margin calls among retail investors had sparked heavy selling earlier in the week, but once those positions were unwound, the market began to recover, he said.
Year-to-date performance of South Korean stocks
“(Wednesday’s) sell-off was primarily driven by upside risk around oil prices stemming from evolving geopolitical events,” said Raisah Rasid, global market strategist at JP Morgan Asset Management.
“As South Korea is a major importer of crude oil, uncertainty over the extent to which oil prices could rise may weigh on the current account balance and increase inflationary pressures,” he said.
As oil prices began to stabilize, risk sentiment improved and Korean stocks rebounded, market watchers said.
U.S. Treasury Secretary Scott Bessent said Wednesday that Washington will implement a series of measures aimed at stabilizing oil shipments through the Persian Gulf, signaling the government is prepared to intervene as geopolitical tensions threaten one of the world’s most critical energy corridors.
Additionally, supply and demand dynamics in the memory chip space are likely to remain tight throughout this year and possibly next, JPMorgan’s Rasid said, adding that long-term structural drivers for Korean stocks remain intact. Memory leaders Samsung and SK Hynix make up nearly 50% of the index, Morningstar data showed.
Similarly, Kieron Poon, chief investment officer of Asian equities at Aberdeen Investments, said Wednesday’s sell-off was also compounded by the fact that the Korean market caught up after a holiday on Monday, so Tuesday’s drop reflected pent-up risk aversion sentiment and losses.
Other Asia-Pacific markets also rose on Thursday, recovering after several days of heavy losses as sentiment improved following overnight gains on Wall Street and easing concerns about rising oil prices.
Australia S&P/ASX 200 traded 0.1% higher.
Japan Nikkei 225 rose 2.5%, after falling 3% in the previous session.
Hong Kong Hang Seng Index is up more than 1%, while the CSI 300 rose 0.86%.
Taiwan’s benchmark Taiex index rose more than 4%.
“Global markets are likely to remain volatile in the near term, and there is still room for further declines if global risk aversion persists as the war with Iran drags on,” Aberdeen’s Poon said.
All eyes are also on China’s big political meeting called “Two Sessions,” which began Wednesday.
China on Thursday set its 2026 GDP growth target at between 4.5% and 5%, the lowest target recorded since the early 1990s, according to a copy of the government work report seen by CNBC, as Beijing grapples with persistent deflationary pressures and trade tensions with the United States.
That target marks a drop from the “around 5%” set over the past three years and the most modest target yet for the world’s second-largest economy, except for 2020, when Beijing did not set a growth target due to the pandemic.
Beijing also kept its budget deficit target unchanged from last year’s “around 4%” of GDP, as the National People’s Congress, the country’s top legislative body, holds its annual meeting this week.
Overnight in the United States, stocks rose, building on the momentum seen late in the previous session, when rising oil prices retreated following developments in the US-Israel war against Iran and fears over a scare over US economic growth faded.
He Dow Jones Industrial Average added 238.14 points, or 0.49%, to close at 48,739.41. The 30-stock index snapped a three-day losing streak. He S&P 500 gained 0.78% and ended at 6,869.50, while the Nasdaq Composite rose 1.29% and settled at 22,807.48.
Technology stocks supported the broader market, particularly those in the chip sector. Micron technology and Advanced Microdevices each advanced more than 5%. Broadcom and NVIDIA rose more than 1% each.
