Bolstered by a sharp rebound in chip stocks, South Korean shares surged strongly on Tuesday, hitting a fresh all-time high. At the same time, global markets stabilized and worries about the outlook for artificial intelligence (AI) spending eased.
Samsung Electronics Co., Ltd. saw its shares jump as much as 11% during the session on the Korea Exchange, marking its largest intraday gain since 2009. SK Hynix rose more than 9%. Both stocks recovered all of the losses from the previous trading session. The Kospi index climbed over 6%, expanding its year-to-date advance to 25% and cementing its status as one of the world's best-performing equity benchmarks.
Year-to-date, shares of both Samsung Electronics and SK Hynix have soared more than 35%, primarily benefiting from a growing market consensus that AI is driving massive demand for high-end memory chips.
"We view yesterday's volatility in the Korean market as a healthy digestion of the prior gains," said Sojung Park, a portfolio manager at Matthews International Capital Management. "From the perspective of earnings growth and valuations, we remain positive on the Korean equity market."
In terms of fund flows, local institutional investors were the primary drivers of Tuesday's rebound, while foreign investors were net buyers of stocks, and retail investors engaged in widespread selling.
The rally also pushed the benchmark Kospi index back above the 5,000-point level, a target set last year by South Korean President Lee Jae-myung's "Corporate Value-up Program." The government and financial regulators have persistently advocated for corporate governance reforms to attract more global investors back to the market.
This rebound has returned the Korea Composite Stock Price Index to above the 5,000-point target established by the president last year. As part of the plan to enhance market valuations, the government and regulators have been committed to corporate governance reforms in an effort to win back the favor of global investors.
