South Korea's benchmark KOSPI index climbed back above the 5,100 level on Monday, recouping some of last week's steep losses as investors snapped up beaten-down semiconductor shares. The index rose 1.61% to 5,145.81 by late morning in Seoul, after briefly dipping to 4,990.66 earlier in the session. Samsung Electronics advanced 3.29%, while SK Hynix jumped 4.51%.
The rebound followed a recovery on Wall Street on Friday, where the Philadelphia Semiconductor Index surged 4.21% after a brutal 12.25% plunge on Thursday. AMD soared 11.04%, Nvidia gained 2.78%, and Micron Technology added 5.12%. That strength spilled over into Seoul, encouraging buying in the two memory-chip giants, which had fallen 6.35% and 10.44%, respectively, on Friday.
Both Samsung and SK Hynix supply memory chips used in AI servers, making their valuations highly sensitive to expectations for future data-center investment. Last week, the KOSPI lost 11.7% amid fears that potential US midterm results could lead to stricter regulations on AI data centers. While those restrictions remain speculative, they added to broader concerns about the sustainability of massive AI-related capital spending.
Mirae Asset Securities strategist Seo Sang-young said bargain hunting and stronger US chip shares could support Korean stocks, according to the Seoul Economic Daily. However, he cautioned that foreign outflows and uncertainty over interest rates could keep volatility elevated. The distinction matters, as fears that future data centers might be delayed are not evidence that existing customers have cancelled memory orders.
Foreign selling persists
The strongest warning against calling a market bottom comes from overseas investors. By late Monday morning, foreigners had sold a net 469.3 billion won of KOSPI shares, while institutions bought 297.3 billion won and individuals purchased 68.7 billion won. Last week, foreign investors sold roughly 10.4 trillion won, much of it in Samsung and SK Hynix.
Domestic investors have absorbed some of that selling, but sustained international withdrawals could quickly overwhelm a fragile recovery. Authorities have also provided breathing room. A three-month waiver of the requirement for brokerages to maintain a 140% collateral ratio on margin loans took effect Monday. The measure allows firms flexibility to adjust requirements or postpone forced share sales when leveraged accounts lose value. It does not eliminate margin calls or guarantee higher prices, but its purpose is to prevent forced liquidations from accelerating a market decline.
Daishin Securities analyst Lee Kyung-min argued that shares below 5,300 offered opportunities because earnings forecasts had improved even as prices collapsed.
What would confirm a recovery?
The return above 5,100 is encouraging, but the KOSPI remains well below its June peak. A single session of bargain hunting cannot settle concerns about AI spending, regulation, or borrowing costs. Kiwoom Securities analyst Han Ji-young considers another succession of steep falls less likely without fresh negative developments, but warned that the rebound's strength depends on economic data and AI-related earnings.
Tuesday's US October inflation report could alter expectations for Federal Reserve interest rates. Investors will also examine results from data-center operator CoreWeave and chip-equipment supplier Applied Materials for clues about financing pressures and technology spending.
This article is for informational purposes only and does not constitute financial advice.
