Stocks, bonds, and currencies all rise together! The energy shock warning temporarily lifted, South Korean assets return from "war discount" to AI chip narrative.

After six weeks of war in Iran, the US and Iran reached a temporary ceasefire agreement at the last minute, boosting market expectations for a relief in energy supply disruptions, thereby boosting risk appetite and causing asset prices in South Korea to rise. The KOSPI index in South Korea surged 7.7% at one point, leading Asian stock markets and rising for the fourth consecutive trading day. Share prices of chip giants Samsung Electronics and SK Hynix rose by 9.2% and 15% respectively. The South Korean won also rose by 1.9% against the US dollar. As the drop in oil prices eased inflation and reduced market expectations for a rate hike by the Bank of Korea before its policy meeting on Friday, South Korean 10-year government bond futures prices rose by 120 basis points at one point, while the yield on South Korean 3-year government bonds fell to 3.3%. The drop in oil prices gave South Korean assets a breather The US and Iran agreed to a two-week ceasefire, which is expected to halt US military actions temporarily. In exchange, Tehran will reopen the Strait of Hormuz, indicating a temporary easing of tensions, though the broader tension may still remain unresolved. CEO of Roundhill Investments, Dave Mazza, said, "South Korea is one of the most obvious beneficiaries of all ceasefire agreements, as it has been under double pressure: rising energy costs and declining risk appetite. But for now, this seems more like a strategic adjustment rather than a complete de-escalation. If the easing of tensions can continue, memory chip stocks like Samsung Electronics and SK Hynix will be the most obvious beneficiaries." The KOSPI index in South Korea has risen by nearly 40% year-to-date, continuing its strong performance from last year. On Wednesday, retail investors sold a net record of 5 trillion won (approximately $4 billion USD) worth of KOSPI stocks, with foreign investors and domestic institutions absorbing most of the selling. The sharp rise in KOSPI 200 index futures in the morning also triggered a temporary halt in exchange program trading. The recovery of foreign capital inflows pushed the won to its highest level since March 11, and South Korean 10-year government bond futures also reached their highest level since March 19. "With the easing of geopolitical risks and the emergence of profit surprises, it now seems that the market is transitioning from a phase of discount driven by war risks to... entering a normalization phase," said Ha SeokKeun, Chief Investment Officer at Eugene Asset Management Co. He added that this could be seen as a sign that the major risk faced by the South Korean stock market previously - energy shocks - is now significantly easing. The Iran conflict has driven up global oil prices, not only raising import costs, but also adding inflation risks to South Korea, which is highly dependent on overseas energy. The energy shock has forced the South Korean government to take increasingly tough measures, including setting a cap on fuel prices to protect the economy. Authorities also stated that they would develop emergency plans to curb energy demand and stabilize prices, highlighting the enormous pressure faced by the South Korean economy, which is heavily reliant on imported oil. "This is a relief buying for the previous oversold conditions," said Francis Tan, Chief Strategist at Singapore's Indosuez Wealth Asia. He added that the fundamental drivers of rising energy prices are unlikely to change significantly in the short term, as lost production capacity cannot be quickly recovered. At the same time, as trust between the relevant countries cannot be rebuilt overnight, ongoing tensions still exist. "Therefore, buyers need to be cautious," Tan warned. Strong demand for chips supports the South Korean economy, with SK Hynix and Samsung Electronics rising sharply on strong prospects The latest developments on Wednesday drove oil prices sharply lower, boosting market sentiment in one of the Asia-Pacific region's most energy-import-dependent economies, shifting investors' focus back to AI trading and corporate governance reforms. Shares of South Korean chip maker SK Hynix rose by 15% on Wednesday to 1,050,000 won per share, outperforming Samsung Electronics' 9% increase and the 8% rise in the South Korean composite index. Samsung Electronics had previously forecast that its quarterly profits would exceed market expectations, boosting expectations for SK Hynix's performance. Samsung Electronics estimated on Tuesday that its first-quarter operating profit would grow more than eight times, exceeding analyst expectations, as strong demand for AI infrastructure led to supply shortages and raised chip prices. Korea Investment & Securities raised its full-year operating profit forecast for SK Hynix by 28% to 216 trillion won ($146.5 billion USD), more than four times the growth in 2025, as the prices of DRAM and NAND chips both exceeded expectations. SK Hynix is the world's second-largest memory chip maker after Samsung Electronics and will release its financial report for January to March later this month. Meanwhile, despite the escalating external risks from the Iran conflict, the extremely strong demand for storage chips has continued to fuel strong growth in South Korea's March exports, providing a powerful cushion for the economy. Data released by the Korea Customs Service early this month showed that adjusted for working day differences, exports in March soared by 41.9% year-on-year; unadjusted exports grew by 48.3% year-on-year, far exceeding the February revised monthly growth rate of 28.7%. Imports increased by 13.2% during the same period, resulting in a trade surplus of $25.74 billion USD. Semiconductors continue to be the main DRIVING force for export growth, with chip exports reaching a record high of $32.8 billion USD, largely benefiting from the continued strong demand for the DRAM/NAND storage chips of South Korea's two major memory chip giants, Samsung Electronics and SK Hynix, amid the global AI investment boom. Driven by global investment in artificial intelligence (AI) and data centers, March monthly chip exports in South Korea surged by an astonishing 151.4% year-on-year. Data indicates that despite facing multiple pressures such as soaring energy prices and escalating geopolitical uncertainties, South Korea's export engine remains robust in the short term.