South Korea’s KOSPI extended one of the sharpest turnarounds in global equities on Friday, briefly reclaiming 7,000 as cooling US inflation encouraged investors to pile back into the chipmakers that drove July’s brutal sell-off.
The benchmark opened 2.7% higher at 6,995.67 and briefly touched 7,010.86, its first move above 7,000 since July 24.
Samsung Electronics gained about 1% early in the session while SK Hynix jumped more than 5%.
The advance leaves the KOSPI on course to snap seven consecutive weekly declines and comfortably outperform most regional peers.
Korea’s AI trade has flipped from liquidation to recovery
The speed of the rebound is striking because the KOSPI was still deep in a rout only two weeks ago.
By Thursday, the index had climbed almost 22% from its July 30 low, meeting the conventional threshold for a new bull market.
Thursday alone brought a 3.6% gain, helped by renewed demand for Samsung and SK Hynix after investors reassessed the outlook for AI memory chips.
Macquarie analysts view much of July’s decline as a positioning and fund-flow shock rather than a collapse in semiconductor fundamentals.
Strong AI infrastructure demand and tight memory supply continue to support the earnings case for Korea’s two largest chipmakers.
That distinction matters after leveraged products and margin selling amplified the earlier downturn.
South Korean regulators have since tightened access to single-stock leveraged ETFs, potentially reducing one source of the extreme swings that characterised the summer sell-off.
Fed relief gives technology stocks more breathing room
The latest catalyst came from the US, where both consumer and producer inflation data reduced fears of an imminent Federal Reserve increase.
US producer prices were unchanged in July after falling 0.1% in June, while annual PPI inflation slowed to 4.7% from 5.5%.
Combined with softer consumer inflation and July’s weak employment report, the data pushed the implied probability of a September Fed increase towards one-third.
Lower rate risk is particularly supportive for Korea because the KOSPI has become heavily exposed to high-growth semiconductor companies.
It also helped lift the broader region: MSCI’s Asia-Pacific index outside Japan rose 0.3% and was headed for a 2.7% weekly advance, while Japan’s Nikkei 225 gained 1.5% and was on course to rise more than 5% for the week.
Oil and geopolitics remain the weak point
The rally is not without a macro risk. Brent traded near $87 a barrel and was still heading for a roughly 4% weekly gain as US-Iran negotiations remained stalled.
Saxo strategist Charu Chanana sees lower Fed risk and softer oil from recent highs as supportive for equities, but considers the rally vulnerable to geopolitical headlines.
Another crude spike could quickly revive inflation concerns and tighten financial conditions.
The yen provides another regional pressure point, trading near 159.4 per dollar as investors price an increasing chance of a September Bank of Japan hike.
The post KOSPI’s 22% rebound has stunned markets: is Korea’s brutal chip rout finally over? appeared first on Invezz
