Here’s why the KOSPI Index soared to ATH after Trump’s tariff threat

The KOSPI Composite Index continued its remarkable rally, reaching its highest level on record as the AI boom continued and the frenzy among investors accelerated. It also jumped despite the renewed tariff threat from the United States. It has soared by over 121% from its lowest level this year.

KOSPI Composite Index jumps despite the tariff threat 

South Korean stocks have been in a strong uptrend in the past few months as demand from investors gained steam. The rally was supercharged last year when the country’s president predicted that the KOSPI Index would jump to KRW 5,000, up from KRW 2,100 at the time.

The index rallied on Tuesday even after Donald Trump announced that he was considering imposing a 25% tariff on all goods from South Korea. He cited the fact that the country’s parliament had failed to codify the deal he reached last year with the government.

The president said that new tariffs will apply to all goods shipped from South Korea, including lumber, autos, and pharmaceutical products. These tariffs would hit top companies like Hyundai, LG, and Samsung. Hyundai sold over 1.1 million vehicles to the United States in 2024.

Donald Trump and his South Korean counterpart reached an agreement that slashed the reciprocal tariffs to 15%. South Korea also pledged to invest billions of dollars in the United States. 

Most recently, a report by Bloomberg noted that the country would delay implementing the investment to the United States because of the fears of capital outflows and currency volatility.

READ MORE: Here’s why the Kospi Composite Index is in an unstoppable bull run

One potential reason why the KOSPI Composite Index is soaring is the concept known as TACO, which stands for Trump Always Chickens Out.

It simply meant that Trump often makes statements that he never follows through on. For example, he recently threatened to take over Greenland and then stepped back, receiving a deal that has always existed.

Looking ahead, the next key catalyst for the KOSPI Composite Index this week will be the upcoming Samsung Electronics earnings, which are scheduled for Thursday. These results will provide more color on its business amid the ongoing AI boom.

The KOSPI Index also rose amid rising optimism that the central bank will deliver a dovish policy statement after a recent report showed that the economy contracted in the fourth quarter. 

The top gainers in the index are companies like Kumho Electric, DYP, Hyosung TNC, Hannong Chemicals, and Hyundai Motor.

KOSPI Index technical analysis 

KOSPI Composite Index chart | Source: TradingView 

The daily timeframe chart shows that the KOSPI Composite Index has rebounded in the past 12 months. It jumped from a low of KRW 2,276 in April last year to the current KRW 5,045.

The index has remained above the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bulls remain in control for now.

The Relative Strength Index (RSI) and other oscillators like the MACD and Stochastic continued rising. Therefore, the index will likely continue rising as bulls target the key resistance level at KRW 5,200.

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