"Seoul Miracle" under the heavy pressure of war! The Asia-Pacific market is experiencing differentiation, why is the South Korean stock market shining brightly in the US-Iran conflict

Notice that the South Korean Composite Stock Price Index (Kospi) hit a record high at the opening on Monday, leading the Asia-Pacific markets higher against the backdrop of rising oil prices and escalating tensions between the US and Iran. As of the time of writing, the South Korean Kospi rose by 4.86% to 7848.63 points. The Nikkei 225 and the Hang Seng Index in Hong Kong experienced declines. Investor sentiment remained cautious after US President Trump rejected the latest ceasefire proposal from Tehran. According to semi-official Tehrans Tasnim news agency citing sources, Iran has submitted a new proposal to American negotiators aimed at ending the conflict in the Middle East. The counter-proposal calls for a ceasefire on all fronts and the lifting of sanctions on Tehran. However, Trump posted on Truth Social that he does not like Iran's response, calling it "TOTALLY UNACCEPTABLE!" Meanwhile, Israeli Prime Minister Benjamin Netanyahu said on Sunday that the war with Iran "is not over" as the US and Israel's goals remain to curb Tehran's nuclear ambitions. Netanyahu made this statement as Trump is set to visit China later this week, with the state visit scheduled from May 13th to 15th. The war and subsequent blockade of the Strait of Hormuz by Iran have led to a surge in global energy costs and a sharp increase in gasoline prices in the US. At the time of writing, June-delivery West Texas Intermediate (WTI) crude oil futures rose by 3.39% to $98.65 per barrel. July-delivery Brent crude oil futures rose by 3.37% to $104.66 per barrel. Kospi's "war premium": From geopolitical risk to the paradigm shift of AI computing power demand When the South Korean Composite Stock Price Index (Kospi) hit a record high against the backdrop of Iran's closure of the Strait of Hormuz, while the Australian, Japanese, and Hong Kong stock markets fell under pressure from soaring oil prices, the divergent picture of the Asia-Pacific market reveals a profound proposition: at the intersection of geopolitics and industrial transformation, the narrative of "structural growth" is replacing the "cyclical risk exposure" as the primary logic of capital allocation. The soaring performance of the Korean stock market appears to be at odds with the Middle East conflict but actually implies a clear industrial transmission chain. By early May 2026, Kospi had surpassed the psychological barrier of 7000 points, with a year-to-date gain of 75%, making it the undisputed leader among major global markets. The driving forces behind this miracle Samsung Electronics and SK Hynix collectively account for 44% of the total market capitalization of the index. Their sharp rise is not a speculative bubble but a projection of the hard demand for AI infrastructure construction. The shortage of High Bandwidth Memory (HBM) constitutes the core narrative of this "memory supercycle." With global AI capital spending expected to reach $655 billion by 2026, Samsung and SK Hynix, as absolute leaders in the HBM market, have secured long-term supply agreements with AI giants like Nvidia. More importantly, this demand is "irreplaceable" regardless of whether the Strait of Hormuz is closed, the computing storage needs for training large language models will not diminish; on the contrary, the global AI arms race accelerated by geopolitical conflicts (from defense intelligence to automated monitoring of energy infrastructure) may further drive demand. The South Korean government's "Enterprise Value Enhancement Plan" provides institutional fuel for this technology bull market. The plan mandates that listed companies improve shareholder returns through buybacks and dividends, directly eroding the "Korean discount" that has plagued the market for years meaning that Korean stocks have long been undervalued compared to their global peers due to chaebol governance structures. As foreign capital flows into the Seoul market at a rate of about $1.2 billion per week, the rise of Kospi is not only a reflection of the chip cycle but also a vote by global pension funds and sovereign wealth funds on the dual story of "governance reform + technological monopoly." However, this extreme concentration also harbors vulnerabilities. In early March, due to geopolitical tensions, Kospi plummeted by over 12% in a single day, exposing structural risks of dependence on a single industry. Foreign funds are showing a profit-taking stance near record highs, indicating that even the most staunch bulls have doubts about the sustainability of the "war premium."