In 2026, despite the negative forecasts accompanying the Iranian war, global stock markets recorded an unexpected recovery. Following a series of events that began in February, the markets achieved new record levels, raising questions about the reasons behind this sudden turnaround.
The events started in January and continued until late February, as global markets responded to expectations of interest rate cuts from central banks, in addition to a super cycle in the memory chip industry that propelled the indices of Korea and Taiwan to record levels.
Details of the Recovery
On February 28, joint airstrikes by the United States and Israel ignited the Iranian war, negatively affecting the markets. Oil prices surged sharply, with Brent crude exceeding $120 per barrel after the closure of the Strait of Hormuz on March 4. The Korean Kospi index fell by 19% in March, marking its largest monthly decline since October 2008.
However, things began to change on March 31, when Pakistan and China proposed a five-point peace initiative calling for a cessation of hostilities. The following morning, Donald Trump announced via social media that Iran had requested a ceasefire, giving the markets a strong boost. On April 7, Trump officially announced a two-week ceasefire with Tehran.
Background & Context
Historically, stock markets have been significantly affected by geopolitical events, but what transpired in 2026 was an exception. Despite the economic pressures resulting from the war, Korean stock markets, heavily reliant on companies like Samsung and SK Hynix, experienced a substantial recovery. Samsung reported record operating profits of 57 trillion Korean won in the first quarter of 2026, contributing to market enhancement.
This rapid recovery reflects the Korean market's ability to rebound from crises, as Samsung and SK Hynix together account for approximately 41% of the total market capitalization of the Kospi index.
Impact & Consequences
Data shows that the Kospi was the top-performing market in 2026, achieving an increase of 51.59% by April 21, equivalent to 13 times the return of the U.S. S&P 500 index. While other markets, such as Turkey, also saw gains, the Kospi stood out in this context.
Conversely, other markets like Saudi Arabia and Norway benefited from rising oil prices, while markets like Taiwan maintained stability during the crisis. These dynamics indicate that markets reliant on oil or technology were better able to adapt to rapid changes.
Regional Significance
The developments in 2026 highlight the resilience of financial markets in the face of geopolitical crises, opening new avenues for investment. The unexpected recovery of global stock markets after the Iranian war suggests a shift in investor sentiment and confidence.
As the world watches these trends, it becomes evident that adaptability and strategic positioning are crucial for markets to thrive amidst uncertainty.