The benchmark KOSPI closed at 6,852.58 points, up 5.89 percent from the previous session, after rising as high as 6,904.55 during the day, as sharp gains in SK hynix and Samsung Electronics helped the index recover from Wednesday's nearly 6 percent plunge.
SK hynix jumped 12.73 percent to close at 1,691,000 won, rebounding sharply from a 9.75 percent plunge a day earlier and climbing as high as 1,720,000 won during the session.
The rebound came after the chipmaker announced after the previous day's market close that it would buy back 40 trillion won ($28 billion) worth of its own shares and cancel all of them, the largest share cancellation ever announced by a South Korean listed company.
The company also strengthened its shareholder return policy, pledging to return at least 50 percent of cumulative free cash flow (FCF) over three years through share buybacks, cancellations and dividends.
Analysts said the buyback could help lift the stock by creating steady demand for shares over the next three months. They also said canceling the repurchased shares would cut the number of shares outstanding by about 3.3 percent, boosting the value of remaining shares and showing confidence in future earnings.
The optimism spilled over to its rival Samsung Electronics, which surged 9.49 percent to 271,000 won. The shares rose as much as 10.30 percent to 273,000 won during intraday trading.
The gains were also fueled by expectations that the chipmaker could follow with a major shareholder return plan. However, it faces constraints on large-scale share cancellations. Such move would raise the combined stake held by Samsung Life Insurance and Samsung Fire & Marine Insurance, potentially forcing the two insurers to sell some Samsung Electronics shares to keep their combined stake below the 10 percent limit.
The rebound in the two chipmakers was backed by strong foreign buying. Overseas investors snapped up a net 1.14 trillion won of Samsung Electronics shares and 541 billion won of SK hynix, making them the two most heavily bought stocks by foreign investors on the KOSPI.
That helped fuel a broader reversal in foreign flows, with overseas investors buying a net 1.72 trillion won of KOSPI shares after selling 3.49 trillion won a day earlier. Retail investors, meanwhile, sold a net 2.28 trillion won, while institutions offloaded 488.1 billion won. The turnaround followed Wednesday's heavy foreign selloff, when overseas investors dumped a net 3.49 trillion won of KOSPI shares.
Sentiment also improved after long-term U.S. Treasury yields stabilized overnight, easing the pressure that had triggered the previous day's global technology selloff.
The U.S. Treasury said it would at least double the size of individual buybacks of longer-dated government securities to $4 billion from $2 billion.
Wall Street's three major indexes subsequently finished higher. The Dow Jones Industrial Average gained 0.22 percent, the S&P 500 rose 0.21 percent and the Nasdaq Composite added 0.16 percent.
Major technology stocks including Apple and Amazon climbed 2.19 percent and 2.46 percent, respectively, while Meta Platforms gained 0.43 percent.
The semiconductor picture, however, were mixed. SK hynix's U.S.-listed American depositary receipts rose 0.35 percent, while Marvell Technology surged 9.85 percent. Broadcom fell 4.61 percent, AMD lost 3.71 percent and Intel dropped 4.02 percent, pulling the Philadelphia Semiconductor Index down 2.12 percent.
Despite Thursday's sharp rebound, analysts cautioned that shareholder returns alone may not sustain the rebound, with longer-term gains depending on whether growth in HBM and AI chip demand continues to translate into stronger earnings and cash flow.
Across Asia, major markets also rebounded from the previous day's losses.
Japan's Nikkei 225 rose 1.36 percent to 66,216.79, rebounding from a 3.16 percent plunge a day earlier, with semiconductor shares leading the gains.
Chinese stocks posted a more modest rebound after Wednesday's technology-led selloff. The Shanghai Composite edged up 0.24 percent to 3,903.72, after tumbling 2.40 percent in the previous session.
Hong Kong outperformed the mainland market, with the Hang Seng Index gaining 0.91 percent to 25,726.23.
AJP Takeaways
• South Korea's KOSPI surged 5.89 percent to 6,852.58 on Aug. 20, 2026, recovering from a 5.80 percent plunge on Aug. 19.
• SK hynix jumped 12.73 percent to 1,691,000 won after announcing a 40 trillion won ($28 billion) share buyback and cancellation plan, the largest of its kind announced by a South Korean listed company.
• Samsung Electronics surged 9.49 percent to 271,000 won amid expectations for a major shareholder return plan, although ownership rules involving Samsung Life Insurance and Samsung Fire & Marine Insurance could constrain large-scale share cancellations.
• The rebound came as long-term U.S. Treasury yields stabilized and Wall Street's major indexes advanced, although the Philadelphia Semiconductor Index fell 2.12 percent.
• Asian markets also recovered on Aug. 20, with Japan's Nikkei 225 gaining 1.36 percent, China's Shanghai Composite rising 0.24 percent and Hong Kong's Hang Seng Index advancing 0.91 percent.
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