The Kospi Index gapped lower on Wednesday, tumbling to 6,473 points, down 10% from its peak earlier in the week, as sharp moves in global bond markets and weakness in heavyweight technology shares rattled South Korean equities. The sell-off coincided with a surge in bond yields worldwide, with South Korea's 30-year yield climbing to 4.72%, its highest level in decades, mirroring moves in the United States, Germany, and France.
Rising geopolitical tensions, particularly the US-Iran stalemate, added pressure because South Korea imports most of its oil from the Middle East. Brent crude traded around $91 a barrel and West Texas Intermediate around $86. Samsung Electronics fell 7.45%, while SK Hynix dropped 8.72%, and SK Square lost 10.84%. Investor concerns about memory chip demand also weighed on related firms including Micron, Kioxia, and SanDisk.
On Thursday, sentiment reversed after the US Treasury Department moved to calm the bond market. Treasury Secretary Scott Bessent expanded a buyback program through early November, focusing on longer-dated debt. The US 30-year yield fell from 5.336% to 5.185%, and South Korea's 30-year yield eased to 4.69%. The Kospi Index jumped more than 6% to an intraday high of 6,874 points, while the iShares MSCI South Korea ETF rose to $180. Samsung Electronics rebounded 7%, and SK Hynix surged 10.6%. EWY has attracted about $6.2 billion in inflows over the past month, lifting its assets to roughly $29 billion.
Technically, the Kospi has recovered from July's low of 5,279, moved above its 100-day exponential moving average, and formed an abandoned baby candlestick pattern, a bullish reversal signal. Analysts see potential upside toward 7,500 and then 8,750, though risks from elevated energy prices, rising US government debt near $40 trillion, and geopolitical uncertainty remain.
