Tensions in the Middle East Ease, Samsung Electronics and SK Hynix Stock Prices May Lead the Rally

The renewed expectations that tensions in the Middle East may ease have revived global stock markets’ preference for risk assets, with major semiconductor stocks such as SK Hynix and Samsung Electronics in South Korea showing clear gains on the 14th.

On that day at the Korea Exchange, SK Hynix rose 6.06% from the previous trading day, closing at 1.103 million won. After opening at 1.092 million won, which was 5.00% higher than the opening price, the stock’s gains expanded further; during the session it once climbed as high as 1.128 million won, setting a new all-time intraday high. Samsung Electronics also rose 2.74%, closing at 2.065 million won. In both stocks’ main trading windows, foreign brokerage firms were present, strengthening market expectations for foreign capital inflows.

The background was the strong performance of the New York stock market last night. As expectations that U.S.-Iran ceasefire negotiations may be approaching spread, the Dow Jones Industrial Average rose 0.63%, the S&P 500 rose 1.02%, and the Nasdaq Composite rose 1.23%. In particular, sentiment toward technology stocks recovered; the Philadelphia Semiconductor Index rose 1.68%, maintaining an upward momentum for 9 consecutive trading days. The strength of the semiconductor sector confirmed in the U.S. stock market directly carried over to the Korean market.

Rather than because military tensions were completely relieved, the improved market atmosphere was more due to strengthened expectations that the conflict would not become prolonged. When U.S. President Trump met reporters at the White House, he said that the U.S. Navy’s naval blockade of Iran began at Korea time 11:00 p.m. on the 13th, but he also noted that Iran strongly hopes to reach an agreement. After that, foreign media also reported that the U.S. has continued behind-the-scenes contacts; financial markets showed a greater tendency to believe that negotiations would lead to an agreement rather than that the situation would escalate to the worst case. This kind of flow is favorable for investing in stocks and other risk assets.

Supply and demand dynamics also supported the rise in semiconductor stocks. On that day at the Korea Exchange, foreign investors and institutions net bought 840.9 billion won and 1.2517 trillion won respectively, leading the index higher. By contrast, retail investors net sold 2.3926 trillion won to take profits. Looking only at the electrical and electronic industry, foreign investors and institutions net bought 764.4 billion won and 992.5 billion won respectively, while retail investors net sold 2.0613 trillion won. If external uncertainty toward the country further eases and U.S. tech stocks continue to stay strong, this flow could develop into a buying trend centered on domestic large-cap semiconductor stocks.