South Korean Shares Slip on Middle East Risks

The benchmark KOSPI fell more than 1% to around 8,700 on Thursday, retreating from record highs and tracking overnight losses on Wall Street as escalating tensions between the US and Iran weighed on investor sentiment. Iran struck Kuwait International Airport and Israel signaled that it, together with the US, was prepared to launch further strikes against Iran if necessary, driving oil prices higher and raising inflation risks. The decline also reflected profit-taking following the index's extraordinary AI-driven rally, with investors turning cautious amid elevated market volatility and growing concerns about stretched valuations. Technology heavyweights Samsung Electronics (-0.6%) and SK Hynix (-3.0%) both traded lower, alongside Hyundai Motor (-3.4%), LG Energy Solution (-5.3%), LG Electronics (-15.0%), and Kia Corp (-3.1%). Still, losses were limited by chip-sector optimism after Goldman Sachs raised its 12-month KOSPI target to 12,000, citing robust AI-driven earnings growth.

The benchmark KOSPI rose 0.15% to close at a record high of 8,801 on Tuesday, as gains in technology stocks offset profit-taking and broader market caution. Samsung Electronics climbed 3.15%, while SK Square surged 6.13%. Sentiment remained supported by optimism over artificial intelligence demand after Nvidia unveiled a new AI-focused chip and discussed AI memory cooperation with SK Group, reinforcing expectations for sustained strength in South Korea's semiconductor sector. Still, gains were limited by concerns over rising inflation and elevated oil prices. South Korea's annual inflation rate accelerated to 3.1% in May, the highest in more than two years, reinforcing expectations that the Bank of Korea could maintain a hawkish policy stance for longer. Investors also monitored renewed uncertainty surrounding US-Iran negotiations, which kept energy prices elevated and weighed on risk sentiment. South Korean markets will be closed on June 3 for a public holiday.

The benchmark KOSPI fell nearly 2% to around 8,630 on Tuesday, retreating from record highs as investors locked in profits amid renewed Middle East tensions and mounting inflation concerns. Oil prices remained elevated after reports that Iran suspended negotiations with the US, fueling concerns over potential disruptions to global energy supplies and adding pressure on inflation. South Korea's annual inflation rate accelerated to 3.1% in May, the highest in over two years, reinforcing bets that the Bank of Korea could maintain a hawkish policy stance for longer. Losses were seen in SK Hynix (-2.3%), SK Square (-1.9%), Hyundai Motor (-5.3%), Hyundai Mobis (-5.9%), and Doosan Enerbility (-5.5%). Still, declines were partly tempered by continued optimism over artificial intelligence demand after Nvidia unveiled a new AI-focused chip and CEO Jensen Huang met SK Group Chairman Chey Tae-won to discuss AI memory cooperation. Samsung Electronics gained 2.4%, while LG Energy Solution rose 2.5%.