2 weeks ago
Korean Stocks Rise 22% as Chip Rally Regains Steam
In South Korea, the stock market just had a very good stretch.
The main stock index, called the Kospi, went up about 22% in just 10 days.
Two big computer chip companies, Samsung and SK Hynix, helped lead the way.
Computer chips are the tiny parts that help computers and phones think, and they are also used for artificial intelligence, or AI.
Many big tech companies are spending a lot of money on AI, so they need many chips.
Before this good stretch, the market had a very bad month in July, when it fell 22%.
That happened because some people had borrowed money to buy chip stocks and were forced to sell quickly.
A new report in the United States showed prices are not rising too fast, which made investors feel calmer.
Some experts still warn that the market may struggle to keep climbing.
Others say the demand for chips is so strong that the good times can continue.
The Kospi gained as much as 4.8% on Thursday, extending its rise from a July 30 low to about 22% in 10 days.
Samsung Electronics and SK Hynix led the advance, each jumping more than 5% as enthusiasm for AI-linked chip stocks returned.
The rally reverses July's 22% tumble, the Kospi's worst month since the global financial crisis, driven by forced liquidations of leveraged chipmaker bets.
A subdued US inflation report and expectations that Samsung and SK Hynix will unveil shareholder return plans lifted sentiment.
Foreign investors have withdrawn more than $100 billion from Korean shares this year and remain net sellers, though some funds have begun to return.
- Who
- South Korean market participants, led by heavyweight chipmakers Samsung Electronics and SK Hynix, along with domestic retail investors and foreign funds.
- What
- The Kospi benchmark surged about 22% from its July 30 low, putting it on track to enter a technical bull market.
- Where
- South Korea, on the Kospi stock exchange.
- When
- Over 10 days through Thursday, following the July 30 low and July's historic rout.
- Why
- Renewed enthusiasm over continued Big Tech AI spending, a subdued US inflation report, and stabilized trading flows after forced liquidations triggered last month's selloff.
Bullish Rebound View
Cautious Outlook View
Sustainability of the rally
Bullish Rebound View
The market overshot to the downside during the unwinding of leveraged positions, so the rebound is natural as flows stabilize.
Cautious Outlook View
A continued rally will be difficult until the AI narrative and US interest rates stabilize; foreign investors remain net sellers after withdrawing over $100 billion this year.
Memory chip demand outlook
Bullish Rebound View
AI agents and physical AI have exploded memory demand while supply capacity stays limited, so near-term demand remains intact.
Cautious Outlook View
The rising threat of competition from China has cooled the memory stock surge, and data-center construction may not continue at this speed forever.
Key facts
- Index
- Kospi
- Gain from July 30 low
- About 22% in 10 days
- Thursday gain
- As much as 4.8%
- Top performers
- Samsung Electronics and SK Hynix, each up more than 5%
- July decline
- 22%, worst month since the global financial crisis
- Year-to-date gain
- More than 60%
- 2026 foreign outflows
- More than $100 billion from Korean shares
- Distance from late June peak
- About 24% below
Quotes
Kang DaeKwun
Chief Executive Officer at Life Asset Management
“Because of AI agents and physical AI, memory demand has exploded, but we entered into this with a quite limited supply capacity — that’s where the bottleneck is.”
livemint.com
“I think the market overshot to the downside during the unwinding of leveraged positions, and the current rebound is a natural one as flow stabilized.”
livemint.com
Sources
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