Bloomberg reported on July 31 that the KOSPI experienced a remarkable rebound. The recent forced selling of leveraged investments, which had contributed to the market's decline, has subsided, and optimism is returning regarding the growth of semiconductor companies driven by increased artificial intelligence (AI) investments.
According to Bloomberg, the KOSPI surged as much as 17% during trading, marking its largest single-day increase ever. This followed a 17% drop over three trading days, driven by concerns over rising AI investment costs and competition from Chinese semiconductor firms.
The rebound was led by semiconductor stocks. SK Hynix nearly reached a daily maximum increase of 30%, while Samsung Electronics saw a peak rise of 26% during the session.
Bloomberg analyzed that the rebound in U.S. tech stocks and expectations for expanded AI investments have revitalized investor sentiment in the South Korean market. Major U.S. tech companies, including Microsoft, have announced plans to increase their AI investments, and Amazon reported strong cloud revenue along with additional AI investment plans.
Expectations are also growing that the forced selling, which had exacerbated the recent decline, will stabilize. Reports indicated that the U.S. hedge fund Situational Awareness, which suffered significant losses from the drop in AI-related stocks, sold a substantial portion of its holdings to Citadel, leading to hopes that the wave of large sell-offs is coming to an end. This fund has also invested in Asian companies, including SK Hynix.
Foreign investors have also engaged in significant buying. According to the Korea Exchange, foreign investors purchased a net 7 trillion won worth of KOSPI stocks on this day, while individual investors sold a net 6.8 trillion won.
Chey Tae-won, chairman of SK Group, also contributed to investor sentiment by purchasing 3,620 shares of SK Hynix for approximately 4.8 billion won. Bloomberg noted that this direct purchase by Chairman Chey was interpreted as a sign of confidence in SK Hynix's long-term growth potential.
The government has also implemented market stabilization measures, including requiring more collateral for leveraged exchange-traded funds (ETFs) that track Samsung Electronics and SK Hynix, which has been cited as a factor in the market's rebound.
Yoon Jung-in, CEO of Fibonacci Asset Management Global, told Bloomberg, "While today's rebound has the character of a relief rally, it is not simply due to stocks being undervalued. I see it as an early recovery signal following extreme volatility, supported by corporate earnings."
* This article has been translated by AI.
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