The benchmark KOSPI closed 1.24 percent lower at 5,937.66 points on Thursday, a day after surging 6.63 percent to 6,012.44. The index had gained nearly 10 percent over the last two sessions, reclaiming the 6,000 mark for the first time since Oct. 14.
Foreign and retail investors bought shares, while institutions remained net sellers. The shift followed the previous day's rally, when foreign investors and institutions bought a net 822.9 billion won and 960.8 billion won, respectively, while individuals sold 1.80 trillion won.
The country's two chip giants moved in opposite directions. SK hynix rose 3.36 percent to 1,537,000 won as of around 3 p.m., while Samsung Electronics fell 4.13 percent to 232,000 won despite posting record quarterly earnings. Both stocks had rallied sharply the previous day, gaining 10.89 percent and 9.01 percent, respectively.
Customer deposits reached 90.10 trillion won as of Tuesday, the latest figures available from the Korea Financial Investment Association (KOFIA), topping 90 trillion won for the first time in five trading sessions.
Margin loan balances, meanwhile, fell to 29.64 trillion won, slipping below 30 trillion won for the first time in about two and a half months.
"There's plenty of cash on the sidelines, while the decline in margin debt is a positive sign for market stability," said Kim Dae-jong, a professor of business administration at Sejong University.
Kim cautioned, however, that higher deposits do not necessarily translate into stock purchases. "A sustained recovery would require stronger trading activity and continued foreign buying to bring that cash back into the market," he said.
Customer deposits also include proceeds from stock sales, so higher balances do not always reflect new money flowing into the market.
The recent rebound has been driven largely by record earnings at the country's two largest chipmakers, with plans for record shareholder returns adding to their appeal.
SK hynix reported third-quarter revenue of 104.62 trillion won and operating profit of 83.33 trillion won on Wednesday, up 328 percent and 632 percent, respectively, from a year earlier. Its operating margin reached 80 percent, supported by high-bandwidth memory (HBM) and server products used in artificial intelligence (AI) infrastructure.
Samsung Electronics also reported record third-quarter earnings on Thursday, with operating profit reaching 107.4 trillion won, nearly nine times the 12.2 trillion won earned a year earlier. Its semiconductor division generated 106.5 trillion won of that profit, driven by strong demand for AI-related memory chips.
Samsung expects AI-driven memory demand to outpace supply in 2027 as technology companies continue expanding data centers.
SK hynix also secured long-term supply agreements with 14 major customers, including global cloud providers, covering more than half of its planned production capacity for 2027 and 2028. The contracts give the company a clearer outlook for future sales.
Kim of Sejong said the agreements could bolster foreign investor confidence, although they alone would not guarantee sustained buying.
"The agreements signal sustained demand for AI data centers and high-performance memory," he said. "But they alone won't sustain foreign buying. U.S. interest rates, the dollar, semiconductor restrictions, AI spending and chip prices will also play a key role."
An analyst at Yuanta Securities, meanwhile, took a more optimistic view, saying the long-term contracts could ease concerns that memory-chip earnings have already peaked.
"Concerns over AI investment returns remain, but the conditions for a sustained rebound are gradually falling into place," the analyst said.
SK hynix on Wednesday approved a 20 trillion won share buyback, with half earmarked for cancellation and the rest for employee compensation, along with a 14 trillion won third-quarter cash dividend. The company expects shareholder returns to total approximately 100 trillion won for 2026, including a 40 trillion won buyback completed earlier this month.
Samsung, meanwhile, approved a 30 trillion won third-quarter cash dividend on Thursday, equivalent to 4,601 won per share. Its total shareholder return for 2026 is expected to reach 90 trillion to 110 trillion won.
Of that amount, 35 trillion won has already been distributed or approved, leaving 55 trillion to 75 trillion won for further dividends and share buybacks and cancellations. The company plans to announce the final amount and details by the end of January 2027.
Together, the two companies expect to return between 190 trillion and 210 trillion won to shareholders for 2026, compared with 72.3 trillion won in cash dividends and share cancellations by all Korean listed companies in 2025, according to KRX figures.
The payouts offer investors another reason to reconsider Korean chip stocks, as a greater share of the industry's record profits is returned directly to shareholders.
Foreign investors have begun returning after weeks of heavy selling. They sold a net 11.24 trillion won of KOSPI shares during Oct. 12–16, including 8.85 trillion won in Samsung Electronics and SK hynix alone, according to Koscom CHECK data.
Although foreign buying resumed this week, the inflows represent only a fraction of the earlier withdrawals.
Retail investors, meanwhile, have been more reluctant to buy into the rebound.
"Many retail investors are taking advantage of the rebound to raise cash," Kim said. "They're also reducing their borrowing to protect against another downturn."
The caution follows a sharp October selloff that exposed the risks of leveraged trading. Forced sales tied to unsettled stock purchases reached 89.3 billion won on Oct. 14 and 80.5 billion won on Oct. 15, before easing to 19.3 billion won as of Tuesday, according to KOFIA.
Such forced sales occur when investors fail to pay for stock purchases on time, prompting brokerages to sell their shares.
Regulators have also moved to prevent another buildup in risky borrowing. On Tuesday, the Financial Supervisory Service (FSS) called on major securities firms to strengthen margin lending controls, risk management and investor protection.
Under industry measures introduced this month, major brokerages have limited total credit exposure to 90 percent of their equity capital. They are also required to take steps to reduce excessive concentration when lending against a single stock exceeds 15 percent of their total margin loan balances.
What will sustain the recovery?
The KOSPI's failure to hold 6,000 on Thursday showed that even record chip profits and renewed foreign buying have yet to produce a steady recovery.
The Yuanta Securities analyst, however, said some market uncertainties could ease after the Nov. 3 U.S. midterm elections.
"Despite the uncertainties, there are reasons to be optimistic about the market," the analyst said.
Kim, meanwhile, said a lasting recovery would require gains to spread beyond the two chip giants.
"Strong earnings and sustained foreign buying are essential, but the rally also needs to spread beyond a handful of large stocks," he said. "For 6,000 to become a reliable floor, cash on the sidelines needs to flow back into stocks without another excessive buildup in margin debt.
Korea's market has ample cash and strong corporate earnings. Whether those strengths can sustain a broader rally remains to be seen.
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