Middle East situation and AI concept are favorable, South Korea's KOSPI index breaks through the 7300 point mark for the first time! "Storage giants" both hit new highs.

On Wednesday, the Asia-Pacific stock market opened higher, with the South Korean benchmark stock index (KOSPI) hitting a new high, surpassing 7000 points, boosting the Asia-Pacific stock market. Overnight gains in US stocks, lower oil prices, and strong corporate earnings boosted investor confidence. US President Trump stated that the US is temporarily suspending the military escort of ships through the Strait of Hormuz, indicating that diplomatic efforts to resolve the Middle East crisis are progressing as planned. The "perfect storm" before the Asia-Pacific opening The atmosphere at the opening of the Asia-Pacific market on May 6th was shaped by three interrelated DRIVES. Engine one: Slight easing of Middle East tensions. On the evening of May 5th Eastern Time, Trump announced on the Truth Social platform that the "Freedom of Navigation" - the military escort of merchant ships through the Strait of Hormuz by the US military - would be "temporarily suspended" due to "significant progress in reaching a comprehensive and final agreement with Iran". Earlier that day, US Secretary of Defense Pete Hegseth had already released a moderate signal, stating that the US-Iran ceasefire agreement was still in effect, and the Iranian attacks on the UAE had not reached the threshold for restarting large-scale military operations, with two US commercial ships and a US destroyer passing safely through the strait, "indicating that the passage is clear". Engine two: Sharp drop in international oil prices. During regular trading hours on Tuesday, the June WTI crude oil contract fell by 3.9% to $102.27 per barrel; the July Brent crude oil contract plummeted by 3.99% to $109.87 per barrel, almost erasing all gains from Monday. The previous day, oil prices had jumped by about 6% due to the Strait of Hormuz conflict and the attack on an oil port in the UAE. In early Asian trading on Wednesday, oil prices further declined. Engine three: Collective surge in US semiconductor stocks. On Tuesday night, the S&P 500 rose by 0.81% to 7259.22 points, the Nasdaq Composite rose by 1.03% to 25326.13 points, both setting new closing highs; the Dow Jones Industrial Average rose by 0.73% to 49298.25 points. Major chip stocks surged across the board, with Micron Technology soaring by 11.06%, Intel skyrocketing by 12.92%, SanDisk rising by 11.98%; Qualcomm surged by 10.79%, and NVIDIA rose by 9.28% after releasing strong quarterly earnings. Driven by the above three engines, the Asia-Pacific market broke out fully at the opening on May 6th. South Korean stock market leads the Asia-Pacific market On May 6th, the South Korean benchmark stock index KOSPI opened at 7093.01 points, up 156.02 points, or 2.25%. But the opening was just the prelude - the index soared thereafter. The KOSPI hit a high of 7327 points during the trading session, setting a new record high and continuing the over 70% increase since the beginning of the year. This was the first time in KOSPI history that it had surpassed the 7000 point mark. Just last Wednesday, the index had just touched 6600 points; on Monday, it surged over 5% and broke through 6900 points; after just a holiday break, the index was already heading towards 7300 points. The Korea Exchange triggered the KOSPI circuit breaker as KOSPI 200 futures rose by 5%, halting program trading for 5 minutes. Samsung Electronics and SK Hynix both set new record highs in early trading, with gains of over 8% and 9% respectively. Apart from South Korea, other markets in the Asia-Pacific region also showed a general upward trend. The Hang Seng Tech Index in Hong Kong rose by over 1%, and the Hang Seng Index rose by 0.35%. The S&P/ASX 200 index in Australia rose by 0.58%. The Japanese stock market remained closed for a holiday. S&P 500 index futures rose by 0.2%, Nasdaq 100 index futures rose by 0.6%; Dow Jones Industrial Average index futures fell by 30 points, a decrease of less than 0.1%. The simultaneous rise in gold and silver signals a cause for concern. Spot gold broke through the $4600 mark, rising by nearly 1% on the day; spot silver rose by over 1% to $73.9 per ounce. The rise in gold prices amid a global stock market surge typically indicates that while the market is chasing risk assets, it is also hedging geopolitical risks by allocating gold - investors have not reached a real consensus on the prospects for peace in the Middle East. At the same time, the macroeconomic fundamentals in South Korea are also continuing to improve. Data released by the Korea National Data Office on May 6th showed that the Consumer Price Index in April rose by 2.6% year-on-year, marking the largest increase since July 2024. Mild inflation combined with strong export-driven economic performance provided additional macro support for the South Korean stock market. Core DRIVE: "Structural Reassessment" of the Super Cycle in Semiconductors The absolute protagonist of this market is the South Korean semiconductor giants. Samsung Electronics' stock price soared by over 11% in early trading, breaking through 250,000 Korean won per share, and its market value officially surpassed the $1 trillion mark, becoming the second Asian company to join the "trillion-dollar market value club" after TSMC. The staggering rise in the stock prices of Samsung and SK Hynix - the two companies account for over 43% of the Korean benchmark stock index (KOSPI) - has also made South Korea one of the hottest stock markets globally. These two Korean companies also played a role in driving the benchmark indices of Asian stock markets to new highs. With the rise in AI spending, investors believe that the demand for storage is in a super cycle, breaking the cyclical fluctuations in prosperity and recession that have occurred over the past decades. The underlying fundamentals narrative can be described as historic. Samsung Electronics' first-quarter financial report for fiscal year 2026 showed that, benefiting from the soaring prices of memory chips and resonating demand for AI computing power, the company achieved quarterly revenue of 133.9 trillion Korean won, up 43% from the previous quarter and 69% year-on-year; its semiconductor business unit achieved revenue of 81.7 trillion Korean won, up 86% from the previous quarter; and operating profit reached 57.2 trillion Korean won, a whopping 756% year-on-year increase, exceeding the total profit for the whole of 2025 in the first quarter alone. The strong demand for AI data center construction by large tech companies has limited chip supplies, driving up prices of high-end and general storage chips, and initiating this "storage super cycle" that began in the second half of 2025. Samsung Electronics is undoubtedly one of the winners of this "storage super cycle" - after doubling its stock price in 2025, it has accumulated a further 116% increase so far this year. Dave Mazza, CEO of New York investment firm Roundhill Investments, analyzed that the trillion-dollar market value is not only a symbolic milestone, but also "consolidates Samsung's key position in the AI supply chain, signaling the continued expansion of Asia's dominant role in the global tech competition." He further pointed out that the market is making a key judgment - the role of storage chips in AI infrastructure has shifted from "cyclical" to "structural" demand. SK Hynix also hit a new high, with gains ranging from 9% to over 10% in early trading, briefly breaking through 160,000 Korean won. SK Square, SK Hynix's largest shareholder, surged by 12%, and the Korean-American semiconductor company rose by over 2%. SK Hynix previously announced another record-breaking quarterly profit and revenue, with product prices continuing to soar due to strong demand for artificial intelligence. The company's net profit in the first quarter reached 40.33 trillion Korean won, far exceeding analysts' expectations of 29.39 trillion Korean won; operating profit in the first quarter was 37.61 trillion Korean won, also higher than market expectations. The average selling price of DRAM in the first quarter rose by about 60% compared to the fourth quarter of last year; the average selling price of NAND in the first quarter rose by about 70% compared to the fourth quarter of last year. SK Hynix stated that strong demand for server memory continues to drive overall market growth, offsetting weak performance in the areas of personal computers and smartphone chips. In the server chip sector, demand for both DRAM and NAND is expanding. SK Hynix expects favorable pricing environment to continue in the short term; DRAM shipments in the second quarter are expected to increase by high single-digit percentages compared to the previous quarter; and NAND shipments in the second quarter are expected to increase by around 15%. The strong performance highlights the continued growth momentum in the global storage chip market, with the demand for the construction of AI data centers by large tech companies limiting chip supply and driving up prices of high-end and general storage chips. This Korean chip maker is benefiting from the spending boom in the field of artificial intelligence, which is reshaping the industry landscape and offsetting concerns about supply chain disruptions caused by the Middle East conflicts.