South Korea's Kospi index rebounded sharply on Thursday, climbing 9.6% after suffering its worst single-day drop ever the previous session. The recovery came as investors reassessed the market impact of escalating U.S.-Israeli military actions against Iran and their potential disruption to global energy flows through the Strait of Hormuz.

The Strait of Hormuz, a critical chokepoint for oil and liquefied natural gas shipments, has seen tanker traffic pile up as fears grow over potential attacks on vessels. This disruption threatens to cut off roughly a fifth of the world's daily oil and LNG supplies, hitting import-dependent Asian economies like South Korea and Japan particularly hard.

South Korean authorities convened emergency meetings this week to address market volatility, considering reactivation of a pandemic-era stabilization fund. While oil prices initially spiked, they showed signs of moderation after President Trump suggested U.S. naval escorts could secure shipping lanes. Analysts maintain a cautious stance on Korean equities but see limited downside risk, recommending defensive sectors while identifying potential opportunities in semiconductors, defense, and AI-related stocks.