KOSPI surges 5% in sharpest rebound since June as chip stocks rally

The KOSPI surged 5% to 6,747.95, its largest single-day gain since June, as investors returned to semiconductor stocks after a two-session rout that had erased more than a quarter of the index's value from its record high.

"The recent share price pullback of KOSPI equities, led by KR memory suppliers, is more of a technical correction driven by market-wide profit-taking and therefore could represent a potential buying opportunity," Citi analysts wrote in a note.

Samsung Electronics climbed 5.9% and SK Hynix advanced 6.4%, leading a broad recovery that triggered a buy-side sidecar — a circuit breaker pausing program trading for five minutes — as the KOSPI 200 futures index rose more than 5% in a one-minute window. The rally recouped some of the 10.5% decline over the prior two sessions, when retail margin liquidations and institutional de-risking had dragged the benchmark 26% below its June 22 record close of 9,124. Foreign investors and institutions were net buyers, while retail investors sold into the strength, exchange data showed. Trading volume reached 387.8 million shares worth about 24.5 trillion won, or $16.6 billion.

The rebound highlights the market's reliance on AI-driven semiconductor demand as the primary engine of South Korea's equity rally. July export data showed outbound shipments surged more than 50% year-over-year in the first 20 days of the month, with semiconductor exports jumping roughly 180%, reinforcing the earnings outlook for the country's dominant memory chip makers. The question now is whether the recovery has legs as global tech earnings season intensifies and geopolitical risks in the Middle East keep energy prices elevated.

Regional Ripple Effects

The KOSPI's rebound rippled across Asian markets still recovering from the prior session's tech-led selloff. Japan's Nikkei 225, returning from a Monday holiday, advanced 3% to 66,067.91, with chip-equipment maker Advantest jumping 7.5% and Kioxia Holdings surging 16.1%. Taiwan's Taiex rose 4.2%, supported by a 3.9% gain in Taiwan Semiconductor Manufacturing Co. Mainland Chinese markets saw more modest gains, with the Shanghai Composite adding 1.4% to 3,850.92, while Hong Kong's Hang Seng edged up less than 0.1%.

Cross-Asset Context

The equity rally coincided with a pullback in energy markets, with Brent crude falling about 1% to trade near $89 a barrel after briefly breaching $90 in the prior session as U.S.-Iran hostilities continued. South Korea's won strengthened against the dollar, reversing a trend that had pushed the currency to a 10-week high during the equity selloff. The easing of oil prices offered some relief to inflation expectations, though Brent remains substantially above historical averages, keeping the Bank of Korea's policy path uncertain.

This article is for informational purposes only and does not constitute investment advice.