KOSPI surges past 7,000 as AI optimism overcomes Middle East concerns

Asian technology stocks gained while Wall Street fell overnight, showing that AI and semiconductor optimism is currently outweighing Middle East-driven risk aversion in the region, for the time being. The KOSPI's push above 7,000 was driven by institutional and corporate buying, while retail and foreign investors sold, indicating domestic confidence in earnings rather than foreign capital inflows. Should oil prices and the Middle East conflict continue to intensify, as overnight events suggest, this tension between AI optimism and geopolitical risk will likely remain the key driver for Asian equities, with any weakness in the AI story removing the current buffer.

Chip stock purchases driven by artificial intelligence optimism lifted South Korea's KOSPI above 7,000 on Wednesday, despite Middle East tensions that kept oil prices and Wall Street pressured.

Summary of the session:

• Japan's Nikkei gained about 0.6%, clawing back some of Tuesday's near-1.7% loss.
• South Korea's KOSPI advanced about 2%, trading near 7,076 after opening around 6,973.
• Institutions and corporations bought net 565 billion won and 678 billion won respectively, while individuals and foreign investors sold net 1.1 trillion won and 165 billion won.
• SK Hynix added about 4% and Samsung Electronics gained about 1%, with most large-cap KOSPI stocks in positive territory.
• The AI and semiconductor theme has revived since the GPT-6 launch, with KOSPI earnings estimates intact, preserving the fundamental basis for further gains.
• The KOSDAQ index also rose about 2% to roughly 828, with foreign and institutional buying of about 197 billion won and 21 billion won respectively.
• These gains occurred despite rising oil prices and interest rates on Middle East tensions and a lower Wall Street close overnight due to the same concerns.

South Korea's KOSPI broke above 7,000 on Wednesday, propelled by fresh AI and semiconductor optimism, while Middle East tensions kept oil and interest rates high and weighed on Wall Street overnight. The index traded around 7,076, up about 2%, after opening near 6,973 and breaching 7,000 during intraday buying.

Institutional and corporate demand, not foreign inflows, supported the rally. Institutions and corporations bought net 565 billion won and 678 billion won respectively, while individual and foreign investors sold into the upturn, with net sales of 1.1 trillion won and 165 billion won. Semiconductor stocks led the gains: SK Hynix rose about 4% and Samsung Electronics about 1%, with most large-cap KOSPI names higher on the day.

Kiwoom Securities researcher Han Ji-young said the move was due to a revival of the AI and semiconductor narrative after GPT-6's launch, adding that KOSPI earnings estimates have not been affected by recent volatility, keeping the fundamental case for further gains intact, according to her.

Korea's gains came with a partial rebound in Japan, where the Nikkei rose about 0.6% after falling roughly 1.7% on Tuesday. The KOSDAQ index, covering smaller caps, also advanced about 2% to around 828, with foreign and institutional net buying of about 197 billion won and 21 billion won respectively.

The rise contrasts with Wall Street's overnight session, where US stocks fell broadly as Middle East tensions flared anew, keeping oil prices and bond yields high. The divergence shows that, for now, the AI and chip earnings narrative outweighs geopolitical risk aversion in the region's equity positioning, a pattern that will likely stay in focus as long as oil and Middle East headlines continue to vie with AI optimism for influence.