The KOSPI index surged nearly 18% in a single day, marking its largest increase on record, prompting investor interest in the market's direction following this dramatic rebound.
According to the Korea Exchange, the KOSPI closed at 6,595.45 on July 31, up 1,001.89 points (17.91%) from the previous trading day. This increase represents both the highest percentage and point gain ever recorded, surpassing the previous record of 11.95% set on October 30, 2008, during the global financial crisis.
The surge was led by semiconductor stocks, with Samsung Electronics rising over 26% and SK Hynix climbing nearly 30%. Foreign investors also contributed significantly, purchasing over 7 trillion won in the stock market, which helped lift the index.
However, on August 3, just days after this record surge, the KOSPI opened lower. As of 9:16 a.m., the index was down 4.19% at 6,319.09, with Samsung Electronics and SK Hynix both experiencing declines of around 7%. Profit-taking from the previous day's gains and foreign selling pressure weighed on the index.
Historically, significant surges do not always lead to stable upward trends. Instead, they often coincide with rebound buying during downturns and normalization of supply and demand. Analysts caution against jumping into the market immediately after a surge, suggesting that investors should first assess whether volatility is stabilizing.
On October 30, 2008, the KOSPI rose 11.95% following news of a currency swap agreement between South Korea and the United States. However, the global financial crisis was not yet over, and the index continued to experience significant fluctuations, ultimately falling 23.13% that month.
A similar pattern occurred in March of this year, when the KOSPI dropped over 19% in two days due to concerns over a Middle Eastern conflict, only to rebound by 9.63% on March 5, marking the second-highest increase since October 30, 2008. Yet, the index continued to fluctuate daily by 5-6% thereafter.
Such rebounds following steep declines do not necessarily indicate the start of a new bull market. A combination of bargain hunting due to excessive losses, short covering, and liquidation can lead to rapid index increases, even if corporate earnings or economic forecasts remain unchanged.
This latest rebound is attributed to renewed optimism regarding AI investments by major U.S. tech firms and expectations for semiconductor demand, alongside the conclusion of forced selling and deleveraging. Given the significant weight of Samsung Electronics and SK Hynix in the KOSPI, their sharp increases have substantially lifted the overall index.
Nonetheless, the KOSPI fell 22% in July. From July 1 to 30, the index dropped 34.01%, and despite the 17.91% rebound on July 31, it still left a considerable monthly loss. A single day's surge does not erase the preceding downward trend.
To determine whether the market is stabilizing, it is essential to analyze not just the index's rise but also the underlying supply and demand dynamics. Key factors include whether foreign buying continues, if the rally in semiconductor stocks spreads to other sectors, and the stability of the won-dollar exchange rate and U.S. tech stocks.
Additionally, the number of rising stocks accompanied by increased trading volume is crucial. If only a few large-cap stocks are driving the index higher, it may indicate a weak economic sentiment, leading to increased volatility. Conversely, if the rally broadens across sectors and trading volume decreases on down days, it could signal a return to market stability.
* This article has been translated by AI.
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