KOSPI Index Jumps 17% as SK Hynix and Samsung Lead Record Rebound

Key Takeaways

• The KOSPI index surged by 17.06% during early trading on July 31, marking its largest intraday percentage gain on record.
• SK Hynix and Samsung Electronics were the primary drivers of this rebound, fueled by renewed confidence in the demand for artificial intelligence infrastructure.
• Despite the rally, ongoing volatility suggests it may be premature to declare a sustained market recovery.

KOSPI Index Records Historic Intraday Gain

On July 31, South Korean stocks experienced a significant rebound, with the KOSPI index trading at 6,528.56, reflecting a rise of 935 points (16.72%). The index peaked at 6,547.56, achieving a 17.06% gain, surpassing its previous record of 11.95% set during the 2008 financial crisis.

This rally came after a three-day decline of over 17%, as investors had previously reduced their exposure to technology stocks due to concerns over high valuations and competition from Chinese semiconductor firms. To manage the volatility, a buy-side “sidecar” was activated, temporarily restricting program-buy orders.

SK Hynix and Samsung Electronics Lead the Rally

SK Hynix and Samsung Electronics, South Korea's largest memory-chip manufacturers, significantly contributed to the KOSPI's rebound. SK Hynix's stock rose by approximately 28%, while Samsung Electronics increased by nearly 25%. The fluctuations in their share prices reflected both renewed optimism in the semiconductor sector and the extent of the prior correction.

US Semiconductor Rally Restores AI Confidence

The recovery in South Korea was bolstered by a broader advance in US technology and semiconductor stocks. Notably, Microsoft shares surged by 15.5% following strong fiscal results, which indicated robust demand for cloud computing and AI services. This positive sentiment extended to the Philadelphia Semiconductor Index, which gained 8.19%, further enhancing confidence in Asian semiconductor companies.

SK Hynix Record Earnings Provide Fundamental Support

SK Hynix reported impressive second-quarter earnings, with revenue increasing by 257% year-on-year and operating profit soaring by 557%. The company attributed this success to rising DRAM and NAND prices and strong sales of high-value products. Additionally, a significant share purchase by SK Group Chairman Chey Tae-won was seen as a vote of confidence in the company's future.

Can the KOSPI Rebound Continue?

While the July 31 rally recovered a substantial portion of the KOSPI's recent losses, the rapid nature of the rebound suggests that technical factors may be at play. The sustainability of this upward trend will depend on future guidance from global technology firms, price movements in DRAM and NAND, and competitive dynamics in the semiconductor industry. Investors will be closely monitoring whether SK Hynix and Samsung can maintain their gains amidst potential volatility.