Kospi Rebounds Nearly 2.5% After Seven-Day Rout as Samsung, SK Hynix and Hanwha Aerospace Lead Recovery

SEOUL, South Korea — South Korean stocks rebounded Friday, snapping a seven-session losing streak that wiped about 20% off the benchmark index, as bargain hunters returned to beaten-down chip giants and other large-cap shares a day after a historic sell-off.

The Kospi was up 136.97 points, or 2.47%, at 5,691.19 as of 3:07 p.m. local time, shortly before the market close. The index had climbed as much as 3.9% earlier in the afternoon, reaching about 5,772, before giving back some of its gains.

The tech-heavy Kosdaq surged even more strongly, rising nearly 5.7% at one point and triggering a buy-side "sidecar," a mechanism that temporarily halts program buy orders when futures prices move sharply.

Relief after 'Black Thursday'

The rebound followed one of the worst days in the South Korean market's history. On Thursday, the Kospi plunged 7.57% to close at 5,554.22, its lowest close since April 7, as a global sell-off in chip stocks triggered circuit breakers on both the Kospi and Kosdaq.

That decline extended the Kospi's losing streak to seven sessions, the longest since September 2024. Over that stretch, the index lost roughly 20%.

Chipmakers bounce back

Samsung Electronics and SK Hynix, which together account for more than half of the South Korean market's value, both moved higher Friday after tumbling Thursday.

Samsung shares rose as much as 4.3% in afternoon trading, after falling 9.48% to 210,000 won on Thursday. SK Hynix gained nearly 3% at one point following an 11.06% drop the previous day.

The rebound in the two chip giants was more modest than in some other large companies, however, reflecting lingering concerns about competition from China in memory chips and doubts about the artificial intelligence spending boom.

Non-chip stocks lead gains

Some of the strongest gains came from companies outside the AI and semiconductor sector. Defense contractor Hanwha Aerospace jumped more than 8%, while Samsung C&T, the Samsung group's construction and trading arm, rose nearly 6%.

Automakers Hyundai Motor and Kia gained about 5% and 4%, respectively, while Hyundai Mobis rose more than 5%. Celltrion, Samsung Biologics and Samsung Life Insurance also posted solid gains.

All of the Kospi's 20 largest stocks rose in early trading, and advancing stocks heavily outnumbered decliners.

Some analysts said the pattern suggested investors were rotating away from AI-linked stocks toward other sectors, rather than returning wholeheartedly to chipmakers.

Why stocks rebounded

The recovery followed gains on Wall Street overnight, where U.S. stocks closed higher as Treasury yields eased. Falling bond yields reduce pressure on technology and growth stocks, whose valuations depend heavily on future profits.

Domestic investors drove much of Friday's buying. Retail and institutional investors were net buyers, while foreign investors continued to sell, extending a prolonged exodus that has weighed heavily on the market.

Analysts at KB Securities said Thursday's sell-off appeared overdone relative to company fundamentals and raised the possibility of a W-shaped recovery, in which the market tests its lows a second time before climbing.

Lingering risks

Despite the rebound, the Kospi recovered less than half of Thursday's losses, and analysts warned the market could remain volatile.

Concerns about a possible interest rate increase by the U.S. Federal Reserve, after hotter-than-expected inflation data this week, continue to weigh on global markets. Doubts about whether heavy, debt-fueled spending on AI infrastructure will pay off have also unsettled investors.

The completion of large share buyback programs by Samsung Electronics and SK Hynix has removed a source of support for their stocks, some analysts noted.

Chinese memory chipmaker ChangXin Memory Technologies' announcement this week of progress on a denser memory design has also raised fears of future oversupply and pricing pressure for South Korean chipmakers.

Steep losses from peak

Even after Friday's rebound, many of South Korea's largest companies remain far below their recent highs. SK Hynix and SK Square have each fallen more than 55% from their peaks, while Samsung Electronics is down about 40%, according to market data.

The sell-off has been especially painful for retail investors who bought leveraged exchange-traded funds tied to Samsung and SK Hynix, which magnify losses when shares fall.

Investors will be watching the Federal Reserve's interest rate decision next week, as well as upcoming earnings from major U.S. technology companies, which could influence sentiment toward AI-related stocks globally.

Samsung Electronics and SK Hynix are also scheduled to report detailed third-quarter results later this month, which will offer further insight into demand for memory chips and the outlook for South Korea's most important industry.