BOK’s Shin Says Chip Boom Will Limit Downside for South Korean Stocks
Summary
- Shin Hyun-song, governor of the Bank of Korea, said the semiconductor upcycle will continue for the time being and limit downside pressure on South Korean stocks.
- He said domestic stocks have seen sharp swings on concerns over slower AI investment, heavy foreign net selling and a surge in leveraged investment.
- He said solid fundamentals, including the spread of AI, the expansion of the global semiconductor cycle and expectations for large operating profits at semiconductor companies, will help limit downside pressure on South Korean stocks.
Forecast Trend Report by Period
BOK report to the National Assembly’s Strategy and Finance Committee
Bank of Korea Governor Shin Hyun-song said strength in the semiconductor industry will persist for the time being, helping limit downside pressure on South Korean stocks. The comments rebut concerns over an artificial intelligence bubble and fears that semiconductor shares have peaked, both of which have been cited as major drivers of the recent market selloff.
In a report submitted July 29 to the National Assembly’s Strategy and Finance Committee, Shin said South Korean equities have undergone a sharp correction on worries about slower AI investment and heavy net selling by foreign investors. Since May, large foreign net sales and a surge in leveraged investment have driven repeated sharp swings in share prices.
Domestic investment demand is concentrated in a small number of AI-related sectors, amplifying volatility whenever issues such as investment or funding strains at major US tech companies and rising interest rates in major economies come into focus, he wrote. The stock market will remain sensitive to external uncertainties including the outlook for the AI industry, shifts in monetary policy in major economies and global capital flows.
Still, Shin said a semiconductor upcycle driven by supply shortages should continue for now and support the domestic stock market. Computing demand is increasing as AI adoption spreads, while major tech companies continue investing to secure a leading position. At the same time, chip supply growth will be constrained by the high complexity of advanced manufacturing processes.
The global semiconductor cycle will remain in expansion for a considerable period as AI applications broaden into areas such as agentic AI and physical AI and related infrastructure investment rises, he added. Solid fundamentals, including expectations for large operating profits at semiconductor companies, should help limit downside pressure on South Korean stocks.
Shim Sung-mi, Korea Economic Daily reporter smshim@hankyung.com
Korea Economic Daily
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