KOSPI rebound in 2026: chips jump, war risk lingers

A sharp start to April for South Korea equities

South Korean equities entered April with a strong rebound as sentiment improved on hopes of war de-escalation in the Middle East. The move was led by heavyweight chipmakers, reinforcing how closely the market’s direction is tied to semiconductors and AI-linked demand. The rally came after a period where geopolitical headlines and oil price moves amplified volatility across Asian risk assets. Even with the bounce, investors are still balancing improving earnings expectations against persistent geopolitical and currency risks.

Apr. 1 surge: chips drive a broad index jump

The KOSPI Index surged 8.4% on Apr. 1, 2026, reflecting a sharp risk-on turn at the start of the month. Samsung Electronics jumped 13%, its biggest gain since December 2001, while SK Hynix climbed around 11%, according to Bloomberg as quoted by Yahoo Finance. The scale of the move underlined how quickly positioning can shift when geopolitical fears soften even temporarily. It also highlighted the market’s concentration in chip names that benefit from the global AI infrastructure build-out.

The Iran war shock and the path back to 6,000

The rebound followed a period of stress after war broke out in Iran. The article notes that on Feb. 28, after the war began, the KOSPI index recovered the 6,000-point mark after 30 trading days. Oil prices had surged and markets swung sharply during the conflict-driven risk-off phase. By mid-March, the index briefly topped 6,000 during the session on the 14th, but later closed below that level as gains narrowed. Even so, the text describes signs of the market recovering toward pre-war levels.

AI demand and memory pricing support the earnings narrative

A key support for the rebound is the continuing AI demand outlook and rising memory chip prices, which the article cites as central to sentiment. Reuters also reported South Korean stocks rising alongside emerging Asian peers after Nvidia’s bullish forecast for AI chip demand. In that Reuters dispatch dated March 17, South Korea’s KOSPI rose as much as 3%, with Samsung up 5% and SK Hynix up 3.7% at the time. Nvidia CEO Jensen Huang said new AI chips were being made by Samsung, leading analysts to expect Samsung’s loss-making foundry business could return to profit as early as next year.

Broker targets turn constructive again

Some securities firms that had emphasized “risk management” began shifting toward more constructive targets as the market stabilised. NH Investment & Securities said it would maintain its annual KOSPI upper target of 7,300 points presented early in the year. Its research head Jo Su-hong said markets tend to react less to war over time and added that if Middle East issues ease, interest rates, inflation and exchange rates could stabilise, supporting the KOSPI’s upward trend. KB Securities set its year-end KOSPI upper target at 7,500 points, expecting a cycle driven by semiconductor earnings. Separately, Nomura projected KOSPI could reach 8,000 in the first half of 2026.

Profit expectations extend beyond semiconductors

The article also points to broader earnings optimism beyond chipmakers. Kim said this year’s KOSPI operating profit is forecast at KRW 792 trillion, up 165% from a year earlier. Even excluding semiconductors, operating profit is expected to rise 37%, according to the same remarks. The text also cites improving results across defence, shipbuilding, refining and energy companies. IBK Securities’ Lee Seung-hoon said industries such as defence and shipbuilding have upside, and added that export industries may benefit from the exchange rate backdrop.

Foreign flows, currency swings, and structural volatility

Despite rising targets, the article flags a structural risk: the index can swing with foreign investor fund flows. Bloomberg data cited in the text shows net outflows of $1.37 billion from South Korean equities so far in 2026. Reuters also reported foreigners were net sellers of shares worth KRW 196.1 billion on Feb. 24, even as the KOSPI closed at a record 5,969.64. The won was quoted at 1,442.5 per dollar on the onshore platform in that same report. Another segment in the provided text described the won weakening to its weakest point in nearly 17 years during a risk-off episode tied to Iran war fears.

ETF flows and the push-pull for global investors

Flows are not one-way across all time frames. The text also notes the iShares MSCI South Korea ETF (EWY) recorded roughly $1 billion in inflows over the past week in one episode, described as the highest in a decade. But the broader context still includes profit-booking after a concentrated rally and sensitivity to US rates and the dollar, as referenced in the discussion around valuation expansion and won volatility. Several comments in the material also emphasise the market’s high weight in Samsung and SK Hynix, reinforcing why chip price cycles and AI headlines can move the entire index.

Key facts at a glance

Market impact: what moved prices and what still constrains them

The material shows two forces acting at the same time. First, improved semiconductor earnings expectations and AI-linked demand have lifted large-cap chipmakers and, by extension, the KOSPI. Second, the Iran war and broader Middle East risk can quickly drive oil-price anxiety, currency weakness, and abrupt de-risking across equities. Foreign selling alongside record index levels illustrates how positioning can remain cautious even when headlines turn positive. Policymaker focus on currency volatility and an overheating housing market also shows why macro stability remains central to the equity story.

Analysis: why this rebound matters for investors watching Korea

The KOSPI’s sharp moves underline how concentrated market leadership can amplify both rallies and drawdowns. When Samsung Electronics and SK Hynix rise strongly, index performance can change rapidly, but the reverse is also true during geopolitical shocks. The broker targets and operating profit forecasts in the text show investors are increasingly anchoring on an earnings cycle driven by memory chips and AI infrastructure demand. At the same time, the repeated references to foreign flows, won volatility, and war-driven oil risks suggest that risk premia may not fade quickly.

What to watch next

The narrative in the material points to a market that can recover quickly when war fears cool, but remains exposed to renewed geopolitical escalation. Investors will likely keep tracking chip pricing, AI demand signals, and the won’s stability for clues on whether foreign flows turn more durable. Separately, policy efforts aimed at invigorating the capital market and improving shareholder returns are highlighted as supportive factors. For now, the market’s direction remains tied to whether semiconductor-led earnings strength can persist through a volatile global backdrop.