AI Optimism Propels Kospi to Historic Monthly Gain Amid Escalating Iran Tensions

The Kospi index surged nearly 31% this month, marking its most significant monthly gain in 28 years. This historic rally was primarily fueled by the ongoing artificial intelligence boom, which allowed South Korean equities to largely ignore mounting geopolitical instability in the Middle East. Semiconductor leaders SK Hynix and Samsung Electronics were the primary catalysts, posting monthly gains of 60% and 35%, respectively. The strength of the tech sector has offset broader regional concerns, leading HSBC to upgrade South Korea's rating from 'underweight' to 'neutral,' citing reduced downside risks from geopolitical volatility. Beyond chips, the rally was supported by growth in nuclear power, defense, shipbuilding, and energy storage. However, the momentum faced a headwind on Thursday as Asia-Pacific markets dipped. The Nikkei 225 fell 1.06% and the S&P/ASX 200 declined 0.24%, reflecting broader anxiety over energy costs and Federal Reserve policy. Oil prices reached four-year highs following reports that U.S. Central Command is preparing plans for military action against Iran. Brent crude rose 3.4% to $121.98 per barrel, while West Texas Intermediate reached $108.22, as a naval blockade of the Strait of Hormuz continues. While the AI-driven surge provided a buffer for the Kospi, the escalating conflict in the Middle East and steady U.S. interest rates continue to create volatility across global indices, including a fifth consecutive losing day for the Dow Jones Industrial Average.