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.

Meta and Nvidia News Reaffirm AI Buildout, China Memory IPO Exposes Tech Gap

Meta said it will invest about 13 trillion won ($9.2 billion) to build a gigawatt-scale data center in Canada. The announcement came after market chatter about Meta possibly having spare computing capacity had fueled worries about slowing AI investment, so the news was read as confirming that AI infrastructure spending is still expanding. Meta shares still closed lower given the company's relatively tight cash flow.

Bank of America reportedly extended a loan of more than $500 million to OpenAI. Given persistent concerns about OpenAI's slow path to profitability, a bank being willing to lend was interpreted as a vote of confidence in the AI ecosystem. The Philadelphia Semiconductor Index rebounded more than 2% on the day.

US outlet The Information reported that Nvidia's H200 chips may be allowed limited import into China for firms such as Alibaba and ByteDance. Analysts said China, which had maintained a policy of protecting domestic chipmakers, appears to be softening its stance to meet surging AI compute demand.

Filing documents for the IPO of Chinese memory maker CXMT showed no HBM investment plans included. With planned fundraising of only about 5.7 trillion won — seen as insufficient to fund HBM development — some said the listing may end up highlighting the technology gap with Korea's leading memory makers rather than closing it.

Japan's Nikkei reported that Samsung Electronics and SK Hynix's combined memory market share of roughly 60% could make them targets of US antitrust scrutiny, also noting a US consumer lawsuit alleging price-fixing by Samsung, SK Hynix, and Micron.

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.