Concerns over artificial intelligence (AI) and the semiconductor industry were alleviated as foreign and institutional investors flocked to the market, leading the KOSPI to achieve both the largest daily gain and percentage increase in history. This surge quickly reversed the steep declines seen over the past three days.
On July 31, the KOSPI index closed at 6,595.45, up 1,001.89 points (17.91%) from the previous trading day. This marks the first time the index has risen by over 1,000 points in a single day since the domestic stock market opened. During the session, it peaked at 6,630.77, reaching an increase of 18.54% at one point.
These figures surpass all previous records. The prior highest percentage increase was 11.95% on October 30, 2008, during the global financial crisis, while the largest point gain was 612.52 points, recorded on June 9 of this year. The KOSDAQ index also surged, closing at 719.76, up 74.98 points (11.63%), reclaiming the 700-point mark.
The significant rise in the Korean stock market was driven by strong earnings reports from major tech companies and news of increased AI investments from the previous night’s New York stock market. The U.S. personal consumption expenditures (PCE) price index for June met market expectations, providing reassurance, while Microsoft and Amazon reaffirmed their robust cloud performance and plans for increased capital expenditures (CapEx), dispelling skepticism surrounding AI investments. This led to an 8.19% jump in the Philadelphia Semiconductor Index, with major U.S. semiconductor stocks like Micron (up 18.4%) and SanDisk (up 26.0%) also soaring.
Buoyed by positive news from abroad, the KOSPI opened at 5,657.79, up 64.23 points (1.15%). Shortly after the market opened, a wave of buying pressure emerged. Just six minutes into trading, a buying sidecar was activated, temporarily halting program trading on both the KOSPI and KOSDAQ markets due to the rapid rise.
The surge was led by major semiconductor stocks and top market capitalization companies. Samsung Electronics closed at 262,500 won, up 26.81% (55,500 won), reclaiming a global market capitalization of $1 trillion. SK Hynix surged 29.95% to finish at 1,718,000 won, hitting the upper limit. Among the top five market capitalization stocks, three, including SK Hynix, Samsung Electro-Mechanics (up 29.92%), and SK Square (up 29.91%), also reached their price limits.
In terms of supply and demand, foreign and institutional investors combined to net purchases of approximately 10 trillion won, driving the market surge. Foreign investors alone net bought 8.6355 trillion won in the KOSPI, setting a record for the largest daily net purchase, while institutions net bought 1.6774 trillion won. In contrast, individual investors, taking advantage of the short-term surge, net sold over 10.5017 trillion won, cashing in on profits. The total trading volume for the day reached 48.9092 trillion won.
Analysts suggest that the recent over-leveraging by global hedge funds has subsided, allowing the market to refocus on fundamentals. For instance, Citadel acquired the margin call position of the U.S. hedge fund Situational Awareness Capital, alleviating supply-side concerns.
Kang Jin-hyuk, a researcher at Shinhan Investment Corp, stated, "The strong performance of big tech has reaffirmed the trend of increased AI investment, and the perception that the deleveraging of global semiconductor stocks is nearing its end has spread. This has led to a significant influx of foreign capital, particularly in memory and AI-related stocks, which are now seen as undervalued."
Lee Kyung-min, a researcher at Daishin Securities, noted, "The CapEx expansion plans from Amazon and Microsoft have eased concerns about the AI investment cycle. However, given the more than 17% surge in just one day, investors should be cautious of profit-taking and increased volatility in the near term."
* This article has been translated by AI.
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