By Kwanwoo Jun


South Korea's benchmark stock index staged a powerful rebound Thursday after suffering its worst drop on record in the previous session.

The Kospi surged as much as 12% early Thursday after opening up 3.1%, putting it on track to recover sharply from Wednesday's 12% plunge--its steepest daily decline on record.

Overnight gains on Wall Street--as investors set aside some fears over the Middle East conflict--helped buoy sentiment. Traders also appear to view the latest selloff as overdone, analysts said.

"At this point, reducing your stock holdings doesn't offer much benefit," Kiwoom Securities analyst Han Ji-young said. "Even simply looking at the rate of decline in stock prices, the plunge was excessive."

Concerns about higher oil prices and a broader potential impact of the Middle East conflict on the energy-reliant South Korea may have prompted investors to book profits after earlier gains, triggering the huge selloff earlier this week, Han said.

Still, valuations of local chip stocks, which led the Kospi rally amid the global artificial-intelligence boom, remain intact, the analyst added.

The Kospi surged 76% in 2025 and remains around 30% higher this year despite its recent volatile trade.

The Kospi was recently up 11% at 5674.41 in morning trade. Chip and auto stocks were among the biggest gainers. Index heavyweight Samsung Electronics rose 15% and memory-chip maker SK Hynix was up 12%, while Hyundai Motor advanced 13%.

The local stock-market operator, Korea Exchange, briefly suspended trading to cool volatility following sharp gains in both the Kospi and the Kasdaq markets.

Shinhan Securities analyst D.K. Noh said foreign investors--recently net sellers of Korean equities--appeared to shift course late Wednesday. Offshore investors remained net buyers of local stocks early Thursday.

The trend of foreign investors reducing exposure to emerging markets and South Korea appears to be easing, Noh said.

The Korean won strengthened against the dollar in early Thursday trade on risk-on sentiment spurred by Wall Street's gains overnight. The greenback was at 1,460.30 won, down 1.1% from 1,476.20 won in Seoul onshore trading late Wednesday.


Write to Kwanwoo Jun at kwanwoo.jun@wsj.com


(END) Dow Jones Newswires

03-04-26 2153ET