KOSPI Foreign Selling Surges as Iran-US Ceasefire Nears Expiry

KOSPI Foreign Selling Surges as Iran-US Ceasefire Nears Expiry

The two-week Iran-U.S. ceasefire expires on April 21, and Asian markets are already under pressure. Japan's Nikkei 225 fell 3.65% to 56,344 on April 20, while foreign investors sold a net 176.4 billion won (~$125M) on the Korean KOSPI, with the index holding narrow gains at 6,210 points.

What triggered it: The U.S. Navy seized an Iranian cargo ship in the Persian Gulf over the weekend, drawing retaliation threats from Iran's military command. Brent crude recovered +10% from its April 17 low of $88 to $96.88 — reversing the brief relief rally seen when Iran conditionally reopened the Strait of Hormuz.

Two channels amplify the risk for Korean investors:

1. Yen carry trade dynamics: As the Bank of Japan signals further rate hikes, the yen is strengthening. Yen carry trade unwinding hits emerging market equities including Korea hard.
2. Energy import exposure: Korea imports nearly 100% of its crude oil. A sustained oil price surge hits airlines, shipping, and chemicals hardest, while the defense sector moves inversely.

Three scenarios after April 21 expiry:

• (A) Two-week extension (50% probability): Brent settles at $88-95, foreign selling pressure eases. Most likely given U.S. midterm elections just 7 months away — energy inflation is politically toxic.
• (B) Resumption of hostilities (30%): Brent targets $105-115, USD/KRW at 1,500+, KOSPI tests 6,000 support.
• (C) Comprehensive peace deal (20%): Brent crashes below $80, global risk sentiment rebounds sharply.

Key signals to monitor on April 21 morning: Brent crossing $100, USD/KRW touching 1,500, KOSPI foreign selling exceeding 300 billion won, and Nikkei falling an additional 5%.

For the full analysis in Korean, visit Snakestock