South Korea's benchmark KOSPI index rebounded sharply on Tuesday, climbing as much as 5.49% to 5,294.35 in early trading before settling at 5,245.72, a 4.52% gain, by late morning. The surge was driven by a powerful recovery in semiconductor stocks, led by Samsung Electronics and SK Hynix, as investors reassessed last week's brutal sell-off.
Samsung Electronics advanced 5.11%, while SK Hynix jumped 6.78% at the later reading. The rebound follows an 11.7% weekly plunge that culminated in Friday's 6.02% drop, which was fueled by concerns over potential US restrictions on AI data centers and broader worries about the sustainability of AI infrastructure spending.
Wall Street Rally and Oil Prices Restore Confidence
The positive momentum on Wall Street on Monday played a crucial role in restoring investor sentiment. The Nasdaq Composite surged 2.74%, the S&P 500 gained 2.35%, and the Philadelphia Semiconductor Index soared 6.85%. Advanced Micro Devices jumped 13.26%, Broadcom rose 8.78%, and Micron Technology climbed 6.25%. These gains were particularly relevant for Seoul's chipmakers, which supply memory chips used across AI infrastructure.
Additionally, crude oil prices retreated as hopes of diplomatic progress between Washington and Tehran reduced fears of further escalation in the Middle East, providing further support to risk appetite.
Samsung and SK Hynix Rebound as AI Spending Fears Ease
Last week, Samsung and SK Hynix were among the hardest hit, with Samsung dropping roughly 6.4% on Friday and SK Hynix slumping 10.4%. The sell-off was triggered by concerns that Democratic gains in the US midterm elections could lead to stricter permitting for new AI data centers, potentially delaying or reducing future AI investments.
Tuesday's gains suggest that some investors now view the earlier selling as excessive. Both companies are key suppliers to the AI supply chain, making their earnings highly sensitive to the pace of data center construction. Lee Kyung-min of Daishin Securities noted that tougher permitting could delay AI investments without necessarily reducing the total amount ultimately spent. This distinction is crucial: a postponed data center might shift memory orders to later quarters, whereas cancelled projects could damage long-term sales forecasts.
However, delays would still affect near-term earnings visibility. The market's renewed optimism rests partly on the assumption that corporate AI spending plans remain intact rather than disappearing altogether.
Can KOSPI Sustain Its Recovery?
The speed of Tuesday's advance underscored how unsettled Seoul's market remains. At 9:06 a.m., the Korea Exchange activated a buy-side sidecar after KOSPI 200 futures climbed 5.76%, temporarily suspending program buy orders for five minutes. A similar curb was triggered on the KOSDAQ at 9:10 a.m.
Gains were not limited to semiconductor heavyweights. Hyundai Motor and battery maker LG Energy Solution also advanced, while airlines benefited from lower fuel prices. Foreign investors and institutions were net buyers in early trading, although continued demand remains uncertain.
Yang Hyun-kyung of iM Securities told ChosunBiz that a durable rebound would require strength to spread beyond Samsung and SK Hynix. The analyst also pointed to upcoming US inflation data and CoreWeave earnings as key tests of sentiment. Hotter inflation could reinforce expectations of tighter Federal Reserve policy, while disappointing AI infrastructure results could revive valuation concerns.
This article is for informational purposes only and does not constitute financial advice.
