Kospi Whipsawed by Iran-US Military Clash, Chip and Nuclear Stocks Cushion the Fall

Kospi Whipsaws on Geopolitical Risk, Closes Slightly Higher

Kospi opened lower and briefly pared losses in the morning. But around midday, news that Iran's Revolutionary Guard had struck US military bases in Kuwait and Bahrain pushed the decline to roughly 2%, and the sell-off deepened further after word came that US Central Command had struck about 90 Iranian military sites.

Even so, foreign and institutional investors—led by pension funds—kept buying, and large-cap chip stocks such as SK Hynix turned higher, helping both the Kospi and Kosdaq trim losses and close slightly in positive territory. Foreign investors also bought Kospi futures for a third straight session.

Some market watchers noted that the pullback has pushed Korea's forward price-to-earnings ratio down to roughly the low six-times range, a level they see as undervalued. Still, lingering geopolitical uncertainty left room for caution about further downside.

Meanwhile, leveraged and inverse ETFs continued to dominate trading-value rankings, with derivatives flows increasingly driving index swings more than the fundamentals of individual stocks.

SK Hynix ADR Offering Draws Strong Demand, Nuclear Stocks Rally

SK Hynix's US depositary receipt offering was about seven times oversubscribed. Bloomberg reported strong demand from long-only funds and sovereign wealth funds among other institutional investors, with the Nasdaq listing set for July 10. Chairman Chey Tae-won is scheduled to travel to the US on the 12th for an interview at the Nasdaq exchange.

The registered depositary limit was set at roughly ten times the initial listing volume, raising the possibility that more domestically traded shares could be converted into ADRs over time — a dynamic seen as reducing free float and potentially supportive for the share price.

Nuclear power-related stocks such as Bosung Powertec, Woojin Entec, and Woori Technology rallied intraday after presidential policy chief Kim Yong-beom signaled an expansion of new nuclear plant construction.

Iran-US Strikes Escalate, Oil Jumps and Asian Markets Retreat

Iran's Revolutionary Guard said it struck US military bases in Kuwait and Bahrain around midday, warning of a stronger response against US bases in the region if attacks continued. US Central Command then announced it had struck roughly 90 military sites inside Iran.

The news sent US futures, which had been higher, into decline, while WTI crude rose about 3% to near $74 a barrel. Major Asian markets including Taiwan, Hong Kong, and Shanghai gave back earlier gains and turned negative.

The renewed exchange of strikes stoked unease that the conflict may not wind down quickly, a reversal from the previous day when President Trump's comments dismissing an escalation had calmed markets.

Nuclear Buildout Backed by Presidential Office, Regulators Probe Front-Running at Broadcaster

Presidential policy chief Kim Yong-beom said new nuclear reactors should be built wherever local communities want them, and that discussions are underway with industry on using LNG combined-heat-and-power plants. Nuclear power is increasingly seen as the stable electricity source needed to support Korea's semiconductor and AI megaprojects.

The Financial Supervisory Service's special judicial police found evidence that employees at Maeil Business TV engaged in front-running across roughly 300 stocks using undisclosed information, and conducted a raid. The illicit gains identified so far are estimated at about 1 billion won. President Lee Jae-myung posted on social media that capital market fairness is a non-negotiable value, stressing the triple safety net of the FSS, police, and prosecutors.

Critics noted that while leveraged and inverse ETFs have come to dominate Kospi trading value and amplify index volatility, regulators have acknowledged the problem but have yet to take concrete action.

Hosts Push Back on Morgan Stanley and Nikkei, Call for Tougher ETF Rules

Morgan Stanley argued in a report that the narrow chip-led rally is ending and market leadership is broadening toward hyperscalers, recommending trimming chip exposure in favor of hyperscalers near term. The hosts called this rotation logic largely after-the-fact reasoning that mainly serves institutional investors competing on short-term returns, arguing it offers little practical value for individual investors.

They also questioned Morgan Stanley's credibility, recalling its past 'Winter is Coming' report that stoked an unfounded memory-downturn scare before the firm walked it back months later, and allegations of a conflict of interest tied to large sell orders placed ahead of bearish reports. They noted SK Hynix excluded Morgan Stanley from this ADR offering's institutional allocation.

On the Nikkei's warning about Korea's chip dominance, the hosts countered that Japan's chip industry collapsed in the 1980s not primarily because of US trade pressure but because Japanese firms failed to adapt as chips shifted from mainframe use to commoditized products for the PC era. Korean firms, by contrast, built their edge in commodity memory during the PC era and are now leading the shift back toward specialized chips through HBM.

On the Maeil Business TV front-running allegations, the hosts argued responsibility should fall on the broadcaster as an institution, not just individual employees. Citing how some European countries punish premeditated white-collar crimes that attack market institutions more severely than impulsive violent crimes, they called for firm accountability for offenses that erode capital market trust.

On leveraged and inverse ETFs distorting underlying stock flows, the hosts argued regulators should halt trading first and work out details — delisting, investor eligibility limits, higher margin requirements — afterward rather than continuing to deliberate. They also urged investors to set a predetermined loss tolerance for stop-loss discipline and to stay focused on company fundamentals and a long-term view rather than reacting to short-term volatility.