Kospi jumps more than 8% on hopes of Iran peace deal; World’s best performing market 94% YTD

South Korean stocks staged a strong rally on Friday, with the KOSPI rallying as much as 8.5%, of course to end a volatile week at higher levels. The improved sentiment was prompted by growing optimism about a potential easing of tensions in the Middle East after US President Donald Trump said a deal with Iran could be reached as early as this weekend.

The benchmark KOSPI rose 660 points, or 8.5%, to 8,424. The surge helped the index finish the week up 3.2%, reversing some of the previous week’s losses, while it fell 3.7% amid a sharp global selloff in AI and technology stocks.

Despite the upheaval, the KOSPI has been the world’s top-performing stock index this year. The benchmark is up 94% so far in 2026, driven largely by a rally in semiconductor stocks linked to the artificial intelligence boom.

Technology heavyweights lead Friday’s advance. Samsung Electronics rose 12.21%, while rival SK Hynix rose 8.85%. Battery maker LG Energy Solutions rose 6.11%. Automakers also joined the rally, with Hyundai Motor up 6.03% and affiliate Kia Corp up 4.81%. Steelmaker Posco Holdings rose 6.84%, while Samsung Biologics rose 1.01%.

The rebound came after Trump said Thursday that the United States and Iran could sign a peace deal this weekend, a move that would reopen the Strait of Hormuz to shipping. However, Iran said it had not yet made a final decision on any deal.

Trump also said that discussions with Iran had been elevated to the highest levels of the Iranian leadership and had been approved. According to him, the main elements of the proposed agreement were approved “both in concept and in great detail” by parties including the United States, Israel, Saudi Arabia, UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan and Egypt.

Friday’s rally caps a week marked by extreme volatility. The KOSPI triggered “sidecar” trading curbs in four sessions, including Friday. Earlier in the week, circuit breakers were activated for the third time this year and the ninth time on record.

Just days ago, the world’s best-performing equity market was caught up in a global technology frenzy. AI and semiconductor stocks, the standout winners of 2025 and 2026, came under intense pressure as investors questioned whether the rally had outpaced underlying fundamentals. The impact was particularly severe in South Korea, one of the most exposed markets to the AI ​​supply chain, with the index plunging as much as 8% in a single session this week.

The pullback came despite a strong long-term growth story. Demand for AI infrastructure has surged over the past year as technology companies around the world race to develop advanced AI models and expand computing capacity. That has fueled strong demand for high-bandwidth memory chips and boosted investor interest in South Korean chipmakers, which hold a vital position in the global AI supply chain.

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