Kospi Bounces Back: Chipmakers Surge as Global Tech Spending Signals Rally Despite Market Turmoil

Kospi Bounces Back: Chipmakers Surge as Global Tech Spending Signals Rally Despite Market Turmoil​

South Korea’s stock market experienced a significant recovery on Thursday, with the benchmark Kospi jumping 4%. This marks the third consecutive rally for the index. The rebound was largely driven by robust performance in chip stocks and optimistic outlook from US technology giants.

However, despite the positive momentum, the stock market remains highly volatile. Kospi, which is noted as a world-leading equity benchmark, is currently still operating within a bear market structure. The index stands significantly down, over 24% from its high of 9,386 reached in June.

Chip Boom Drives Recovery and Boosts Key Blue Chips​

The immediate rally benefited major semiconductor players like Samsung Electronics and SK Hynix. Shares of these two giants, which constitute more than half of the Kospi benchmark, rose by up to 6%. This surge was fueled by strong economic data for the nation.

Latest government statistics confirmed that South Korea’s economy expanded by 0.6% in the April-June period, surpassing the median estimate of 0.4% from a Reuters poll. While this figure is slower compared to the 1.8% growth seen in the first quarter, it underscores the sustaining power of chip-led industry expansion.

US Tech Giants Outline Massive AI Spending Plans​

The domestic rebound occurred alongside an upward trend across Asian markets. U.S. technology firms are actively outlining major capital expenditure plans that stand to benefit regional chipmakers. These declarations signal a robust outlook for the semiconductor sector.

Alphabet, the parent company of Google, raised its expected capital expenditure for the year, now projecting spending between $195 billion and $205 billion. This commitment highlights the rapid shift in Artificial Intelligence (AI). AI is moving beyond mere infrastructure buildout into active market disruption across search and e-commerce platforms.

Government Steps In Amid Market Volatility Fears​

The stock market has seen extreme swings, causing panic among retail investors due to this volatility. Authorities have intervened to provide stability following periods of intense speculation. President Lee Jae Myung recently acknowledged the instability of the domestic market.

Last week, regulators moved to cool speculative fever by implementing a ban on new listings of leveraged exchange-traded funds linked to individual stocks. This abrupt measure came just two months after such investment vehicles were initially approved for listing.

Foreign Investment Moderating Corrective Selloffs​

The recent correction in Kospi was significantly attributed to profit-taking and rebalancing activities by foreign equity investors. However, analysts are noting a shift in capital flow. Citi analysts have indicated that the foreign selloff is currently moderating. They also noted emerging signs of buy-on-dip capital flowing into the market.