South Korea's benchmark Kospi index opened at a record high on Monday, leading gains in the Asia-Pacific region against a backdrop of rising oil prices and escalating tensions between the U.S. and Iran. As of the latest update, the Kospi was up 4.86% at 7,848.63 points, while Japan's Nikkei 225 and Hong Kong's Hang Seng Index declined. Investor sentiment remained cautious after U.S. President Donald Trump rejected Tehran's latest ceasefire proposal. According to Iran's semi-official Tasnim news agency, citing informed sources, Iran presented a new proposal to U.S. negotiators aimed at ending the Middle East conflict. 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 did not like Iran's response, calling it "TOTALLY UNACCEPTABLE!" Meanwhile, Israeli Prime Minister Benjamin Netanyahu stated on Sunday that the war with Iran is "not over yet," as U.S. and Israeli objectives remain focused on containing Tehran's nuclear ambitions. Netanyahu's remarks came as Trump is scheduled to begin a state visit to China later this week, from May 13 to 15. The conflict and subsequent Iranian blockade of the Strait of Hormuz have caused global energy costs to surge and sharply driven up U.S. gasoline prices. As of the latest update, June delivery West Texas Intermediate (WTI) crude futures were up 3.39% at $98.65 per barrel. July delivery Brent crude futures rose 3.37% to $104.66 per barrel.

The "War Premium" of the Kospi: A Paradigm Shift from Geopolitical Risk to AI Computing Necessity When South Korea's Kospi index defied the odds to reach a historic high amidst the smoke of Iran's closure of the Strait of Hormuz, while stock markets in Australia, Japan, and Hong Kong came under pressure from soaring oil prices, the divergent picture in the Asia-Pacific region reveals a profound proposition: at the intersection of geopolitics and industrial transformation, "structural growth narratives" are replacing "cyclical risk exposures" as the primary logic for capital allocation. The Kospi's surge, seemingly at odds with the Middle East conflict, actually follows a clear industrial transmission chain. By early May 2026, the Kospi had broken through the 7,000-point psychological barrier, with a year-to-date gain of 75%, making it the undisputed leader among major global markets. The dual engines driving this miracle—Samsung Electronics and SK Hynix—collectively account for 44% of the index's total market capitalization. Their dramatic rise is not a speculative bubble but a reflection of the hard demand for AI infrastructure construction. The supply shortage of high-bandwidth memory (HBM) forms the core narrative of this "memory super cycle." With global hyperscalers' AI capital expenditure projected to reach $655 billion by 2026, Samsung and SK Hynix, as the absolute dominants in the HBM market, have secured long-term supply agreements with AI giants like NVIDIA. More critically, this demand is "non-substitutable"—regardless of whether the Strait of Hormuz is closed, the computing and storage power required to train large language models will not disappear. On the contrary, the global AI arms race accelerated by geopolitical conflicts—from defense intelligence to automated monitoring of energy infrastructure—could further drive up demand. The South Korean government's "Corporate Value-up Program" has provided institutional fuel for this technology bull market. The program mandates listed companies to improve shareholder returns through buybacks and dividends, directly dismantling the "Korea Discount" that has plagued the market for years—the persistent valuation discount of Korean stocks relative to global peers due to chaebol governance structures. As foreign capital flows into the Seoul market at a rate of approximately $1.2 billion per week, the Kospi's rise is not merely a reflection of the chip cycle but a vote of confidence from global pension and sovereign wealth funds in the dual narrative of "governance reform + technology monopoly." However, this extreme concentration also harbors fragility. In early March, the Kospi plunged more than 12% in a single day due to geopolitical tensions, exposing the structural risk of over-reliance on a single industry. Foreign capital showed profit-taking tendencies near record highs, indicating that even the most steadfast bulls harbor doubts about the sustainability of the "war premium."