South Korea's KOSPI posts sharpest rise in 3 weeks as investors buy the Trump tariff dip

By Cynthia Kim and Joyce Lee

SEOUL, Jan 27 (Reuters) - South Korean shares swept to their biggest daily jump in three weeks on Tuesday as the global AI boom drove a sharp tech rally, taking the sting out of U.S. President Donald Trump's threat to impose higher 25% tariffs on Korean goods.

Trump said on Monday he was increasing tariffs on South Korean imports into the United States related to autos, lumber and pharmaceuticals to 25%, from 15%, accusing the country's legislature of "not living up" to its trade deal with Washington.

The news initially pulled down the benchmark KOSPI .KS11 by 1%, but that just lured buyers looking for exposure to Asia's best-performing market in 2025, a title it won on the back of surging AI-driven demand in the tech sectors.

On Tuesday, that tech euphoria helped the index rally 135.26 points, or 2.73%, to close at 5,084.85, its biggest one-day increase since January 5.

Heavy lifters were Samsung Electronics 005930.KS and SK Hynix 000660.KS, the two chipmakers dominating in memory chips critical for AI-linked data centers. Samsung rose 4.87%, while SK Hynix soared 8.70% to a record high.

South Korea’s automakers clawed back early losses, with shares of Hyundai Motor 005380.KS closing down 0.81%. Sister company Kia Corp 000270.KS finished 1.1% lower after dropping as much as 6% earlier. Hyundai Mobis 012330.KS fell 1.1% having lost as much as 5.7% intraday.

The won KRW= was down 0.3% at 1,447.9 per dollar as of 0832 GMT, also retracing initial losses of 0.6%, coming off a near one-month high hit on Monday.

"Some investors took today as an opportunity to buy-on-the-dip as many who missed out on the recent rally were waiting for some kind of correction," said Lee Sung-hoon, an analyst at Kiwoom Securities.

"Market participants are well aware of how political situations related to tariffs unfold so not many are regarding this as something that could actually hurt corporate earnings."

South Korea scrambled on Tuesday to assure the U.S. it remained committed to implementing a trade deal, and announced plans to send a top trade envoy to Washington soon to meet U.S. Trade Representative Jamieson Greer.

It was not immediately clear when Trump's threatened tariff hike would take effect, or what specifically triggered the U.S. President's directive.