South Korea's Kospi Hits Record High Amid Regional Market Declines
By John Nada·Feb 20, 2026·4 min read
South Korea's Kospi index achieves record highs, fueled by insurance and defense stocks, amidst regional market declines and rising U.S.-Iran tensions.
South Korea's Kospi index reached a record high for the second consecutive day, driven by strong performances in the insurance and defense sectors. Notable gains were seen in Samsung Life Insurance, which rose over 3.59%, and Hanwha Aerospace, which surged 6.35%. These movements occurred despite declines in other major Asia-Pacific markets, reflecting a divergence in investor sentiment.
The Seoul city skyline early on December 16, 2020, painted a picture of a bustling financial hub, where optimism thrived amid a backdrop of geopolitical tensions. The Kospi index touched an all-time high, powered by a rally among insurance stocks and defense players. Alongside Samsung Life Insurance, Mirae Asset Securities also reported a gain of 3.69%. The defense heavyweight Hanwha Aerospace's impressive jump of 6.35% indicates a robust confidence in the sector, while its counterpart Firstec surged by an astounding 16.7%. Index heavyweight SK Hynix contributed positively as well, with a rise of 3.36%, showcasing the strength of South Korean technology stocks in this bullish phase.
While the Kospi rallied, other Asia-Pacific markets exhibited a contrasting trend, primarily influenced by external factors. Investors were reacting to the overnight decline in all three major Wall Street indexes, which faced pressure from a drop in private credit stocks and escalating tensions between the U.S. and Iran. The geopolitical landscape has grown increasingly fraught, particularly following U.S. President Donald Trump's statement indicating that a decision regarding military action against Iran would be made within ten days. This announcement has raised alarm bells globally, and investors responded by pushing oil prices higher, signaling a potential ripple effect across markets. U.S. crude prices rose by 0.53%, trading at $66.78 per barrel on Friday, while the global benchmark Brent experienced a milder increase of 0.18%, settling at $71.79.
The implications of these developments extend beyond South Korea. As traders in Asia assessed Japan's inflation data, a notable dip below the Bank of Japan's 2% target for the first time in over 45 months added another layer of complexity to market assessments. Japan's Nikkei 225 index fell by 1.29%, largely due to declines in utilities stocks. The situation was further complicated by the volatility of shares in Sumitomo Pharma, one of the country's largest pharmaceutical companies, which saw its stock fluctuate wildly, climbing as much as 6.81% before plunging over 11% in early trade.
In Hong Kong, the Hang Seng index also faced challenges, down by 0.5%, with technology stocks dragging down performance. Meanwhile, mainland China's markets remained closed for the Lunar New Year holiday, leading to a quieter trading atmosphere in the region. Australia’s S&P/ASX 200 index slipped just below the flatline, reflecting a cautious sentiment among traders.
The contrast between the Kospi's performance and other indices raises significant questions for investors. While many markets are grappling with uncertainty, South Korea's resilient stocks, particularly in the insurance and defense sectors, are proving to be attractive options. This divergence may entice institutional investors looking for opportunities amid the turbulence, suggesting that South Korea could become a focal point for capital inflows in a risk-averse climate.
As the Kospi continues to rally, it reflects not just the strength of individual sectors but also a broader narrative about South Korea's economic resilience. The insurance sector, for instance, has been a critical player in this upward trajectory, with companies like Samsung Life Insurance and Mirae Asset providing solid returns amid global uncertainties. Similarly, the defense sector's robust performance can be seen as a response to the heightened geopolitical risks, making stocks in this area particularly appealing to investors seeking to hedge against potential downturns in other markets.
Moreover, the current geopolitical tensions, particularly the potential for military action against Iran, have significant implications for global markets, especially commodity prices. The rise in oil prices is particularly noteworthy as it can lead to inflationary pressures, impacting consumer spending and corporate margins. For South Korea, which is heavily reliant on energy imports, the increase in oil prices could pose challenges, even as the Kospi index reaches new heights.
As the situation with Iran develops, market participants will be closely monitoring the potential impacts on trade and economic relations. Any military engagement could lead to increased volatility in oil prices, which would have far-reaching consequences for economies across the Asia-Pacific region. This uncertainty could temper the optimism currently surrounding the Kospi, despite its record-breaking performance.
Investors will also be keeping an eye on the Bank of Japan's monetary policy, especially in light of the recent inflation data. A failure to meet inflation targets could prompt the central bank to reconsider its approach, potentially affecting the Japanese yen and thereby influencing currency markets regionally. Given the interconnectedness of the global economy, shifts in policy from Japan could have cascading effects, impacting South Korea and other neighboring economies.