Kospi Surges 22% From July Low on AI Optimism, Nears Technical Bull Market
Summary
- The Kospi has rebounded more than 20% from its recent low on recovering AI investment sentiment, putting it on the verge of entering a technical bull market.
- Samsung Electronics and SK Hynix rose more than 5% intraday to lead the index higher, while improving semiconductor investment sentiment and the government's tighter regulation of leveraged exchange-traded funds (ETFs) helped stabilize the market.
- US July consumer price index (CPI) data, easing concern over additional rate hikes by the Federal Reserve (Fed), expectations for shareholder return policy announcements, renewed inflows from foreign investors, and the outlook for memory semiconductor demand are providing a supportive backdrop for equities.
Forecast Trend Report by Period
South Korean stocks rebounded sharply on recovering artificial-intelligence sentiment, leaving the Kospi on the verge of entering a technical bull market.
On Aug. 13, the Kospi climbed as much as 4.8% intraday, extending its rebound from the July 30 low to about 22%. Major indexes are typically considered to have entered a technical bull market after rising more than 20% from a recent trough.
Bloomberg said Samsung Electronics Co. and SK Hynix Inc. led the advance. Both stocks rose more than 5% during the session, lifting the broader index.
Investors say recent earnings from global big tech companies reaffirmed plans to keep expanding AI spending, helping improve sentiment toward semiconductor shares. The South Korean government's tighter regulation of single-stock leveraged exchange-traded funds, along with a decline in margin trading, also helped stabilize the market.
Kang Dae-kwon, chief executive officer of Life Asset Management, said the market had fallen excessively during the unwinding of leveraged positions and is now seeing a natural rebound as fund flows stabilize. Still, he added that it remains unclear whether the rally can continue before expectations for AI investment and the US interest-rate environment become more stable.
US July consumer price index data also supported sentiment toward chip stocks after matching market expectations and easing concern about additional rate increases by the Federal Reserve. Expectations that Samsung Electronics and SK Hynix will announce shareholder return policies have also recently supported the market.
The Kospi has risen more than 60% this year, but it remains about 24% below its June peak. Foreign investors have been net sellers of more than $100 billion this year, though some overseas funds appear to be returning as the recent share-price correction has made valuations more attractive.
Some investors also expect demand for memory chips to remain strong as AI services spread. Baillie Gifford emerging-markets equities specialist Chi-an Zhang said demand for memory is surging as AI agents and physical AI expand, while supply capacity remains limited. Few companies globally are in a position to resolve that bottleneck.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.