Kosdaq Reclaims 900 for First Time in Three Months as AI Parts Suppliers, Optical Communications Stocks Lead

The Kosdaq index rose back above 900 intraday for the first time in about three months, led by gains in artificial intelligence-related materials, parts and equipment makers, optical communications stocks and power infrastructure names. Easing concerns over additional U.S. interest-rate increases also helped draw buying back into small- and mid-cap shares.

As of 10:20 a.m. on October 2, the Kosdaq was up 0.92% from the previous session at 902.49. It was the first time the index had traded above 900 since early July. Optical communications stocks including Sungho Electronics, OE Solutions and RF Materials led gains, alongside semiconductor materials, parts and equipment names such as Jusung Engineering, NeoSem, Leeno Industrial and Simmtech.

The Kosdaq has rebounded more sharply than the Kospi in recent weeks. The junior index climbed about 10% from 812.41 on September 15 to 894.29 on October 1, while the Kospi rose about 5% over the same period.

The rally has been driven by expanding global AI investment. As hyperscalers continue to build out data centers, the benefits have spread beyond memory chips to semiconductor equipment, package substrates, optical communications and power equipment. While large-cap semiconductor stocks are already constrained by high earnings expectations and valuation concerns, parts suppliers and infrastructure companies are emerging as more direct beneficiaries of new investment.

Investor flows also tilted toward the Kosdaq. On October 1, foreign investors were net sellers of 548.5 billion won on the main stock market but net buyers of 227.8 billion won on the Kosdaq. Institutional investors also bought a net 568.2 billion won on the Kosdaq, exceeding their net purchases on the main board.

Expectations for a slower pace of U.S. rate increases also supported smaller growth stocks. CME FedWatch data showed the probability of a Federal Reserve rate increase in October fell to about 24% from 70% a week earlier. That reduced pressure on growth shares, which had been relatively vulnerable to a sharp rise in rates.

The expansion of AI investment is also reshaping the Kosdaq's market-cap rankings. None of the top 10 Kosdaq companies by market capitalization at the end of last year were semiconductor stocks. As of October 1, six names — Jusung Engineering, Wonik IPS, EO Technics, Leeno Industrial, Simmtech and HPSP — ranked in the top 10.

Jusung Engineering's market capitalization has increased about 8.8 times since the end of last year, lifting it from 57th at the start of the year to third place. Daehan Optical Communication also saw its market value rise about ninefold over the same period, climbing from outside the top 300 to the low 30s.

Market participants are watching whether semiconductor materials, parts and equipment makers, optical communications shares and power-related stocks can maintain their relative strength as long as AI infrastructure investment continues. Still, short-term volatility could increase ahead of U.S. employment data and the holiday period.