South Korea's KOSPI Surges to Three-Week High as Chip Stocks Rally and Wall Street Hits Fresh Record

SEOUL — South Korea's benchmark KOSPI index closed at 6,977.94 points Friday, surging 164.60 points, or 2.42%, to reach its highest level in more than three weeks as strength on Wall Street and renewed momentum in semiconductor shares lifted investor sentiment across the market.

The rally extended a powerful two-day advance that began Thursday, when the index climbed 3.56% to close at 6,813, itself a three-week high at the time. Combined, the back-to-back gains reflect a market that has swung dramatically in recent weeks, oscillating between sharp sell-offs and equally sharp rebounds as investors reassess the durability of the artificial intelligence-driven rally that has defined South Korean equities for much of the year.

Friday's advance came as the S&P 500 in the United States reached a fresh record high after government data showed U.S. producer prices were unchanged in July, below expectations for an increase. The reading eased concerns about inflationary pressure and reinforced expectations that the Federal Reserve has room to keep monetary policy accommodative, a dynamic that has repeatedly spilled over into risk appetite for Asian technology shares.

Semiconductor giants Samsung Electronics and SK Hynix, whose combined weighting drives a large share of the KOSPI's daily moves, led Thursday's rally with gains of 3.72% and 5.92%, respectively. The renewed optimism followed an overnight climb in U.S. technology stocks and added to a string of outsized single-day moves in the two chipmakers over the past several weeks.

The broader advance on Thursday was not limited to chip stocks. SK Square jumped 9.08%, while Hyundai Motor rose 2.20%, LG Energy Solution gained 1.95%, Hanwha Aerospace added 2.51%, KB Financial Group climbed 1.27%, Shinhan Financial Group rose 2.70% and Hyundai Mobis advanced 2.51%, according to data compiled by Trading Economics. The broad-based participation suggested the rally was not confined to a handful of AI-linked megacaps but extended into financials, autos and defense-related names as well.

Adding to the positive backdrop, the South Korean government unveiled plans to ease regulatory requirements for semiconductor and artificial intelligence megaprojects, a move expected to help unlock roughly 4.2 trillion won in private investment. The policy shift came as Seoul has sought to position the country as a central hub in the global AI supply chain, leaning heavily on Samsung and SK Hynix's dominance in memory chip production.

The latest gains mark a striking turnaround from the volatility that gripped the KOSPI just weeks earlier. In late July, the index suffered one of the sharpest two-day routs in its history, tumbling nearly 6% on July 29 alone after a similarly steep decline the previous session, falling below the 6,000 mark and triggering circuit breakers and sell-order sidecars in both the KOSPI and the smaller KOSDAQ market for two consecutive trading days. According to the Korea Exchange, that marked the first time circuit breakers had been triggered in both markets on consecutive days, underscoring the severity of the sell-off, which was driven largely by concerns over the sustainability of capital spending tied to the AI boom and rising competition from Chinese chipmakers.

The index then staged a historic reversal on August 1, closing up 17.91%, or 1,001.89 points, to 6,595.45 — the largest single-day percentage gain in the benchmark's history. That rebound was fueled in large part by comments from Amazon's leadership clarifying that demand for AI infrastructure remained undersupplied and would likely stay that way through 2027 and beyond, a signal that eased fears of an imminent slowdown in AI-related capital expenditure. Samsung Electronics jumped 27% that day, while SK Hynix hit its daily upper trading limit of roughly 30%.

Despite the dramatic rebound, the KOSPI as of early August remained roughly 30% below the all-time high of 9,385.59 it touched on June 19, a level that had marked the highest point in the index's 46-year history at the time. The round trip from record highs to a sharp correction and back to a multi-week high within a span of about eight weeks has left the index up more than 116% over the trailing 12 months, according to data from Investing.com, even as the sharp swings have rattled retail investors who had piled into chip stocks during the earlier stages of the rally.

South Korea's semiconductor exports have continued to provide fundamental support for the market's advance. Exports in June rose to $44.8 billion, an increase of nearly 200% from a year earlier, driven by surging global demand for high-bandwidth memory chips used in AI data centers. SK Hynix posted record second-quarter revenue of 79.3 trillion won, up 257% year-over-year, with an operating margin of 76%, though the stock fell in the immediate aftermath of the earnings release as investors weighed questions about the pace of future capital spending.

Market strategists have pointed to a mix of factors behind the recent volatility, including concerns about the scale of debt financing behind AI infrastructure buildouts, competition from Chinese semiconductor producers, and questions about whether current capital expenditure levels across the industry are sustainable. At the same time, corporate governance reforms in South Korea — including three revisions to the country's Commercial Act between mid-2025 and early 2026 — have been credited with helping narrow the long-standing valuation gap between Korean equities and their global peers, often referred to as the "Korea discount."

Trading volume remained elevated Friday, with the KOSPI opening at 6,995.67 and trading in a range between 6,848.43 and 7,010.86 during the session, according to Investing.com data. Foreign investor flows, which turned negative earlier in the year during periods of market stress, have been closely watched by analysts as a barometer of confidence in the sustainability of the current rally.

With South Korean markets closed over the weekend, investors head into the new trading week looking for further signals from Wall Street and incoming economic data to determine whether the recent momentum in chip stocks can be sustained, or whether the market remains vulnerable to the kind of sharp reversals that have characterized trading throughout much of the summer.