South Korean Kospi Surges 6% Amid AI Chip Hopes Despite Weekly Loss
The South Korean equity market witnessed a dramatic recovery on Friday, with the benchmark Kospi index rallying nearly 6% following a volatile week. While high-profile semiconductor stocks led the charge, the broader market continues to grapple with a second consecutive weekly decline.
Semiconductor Giants Lead the Massive Friday Rally
The primary driver behind the Kospi's 5.76% surge—an increase of 440 points to reach 8,008—was the significant rebound in major technology heavyweights. Samsung Electronics emerged as a standout performer, with its shares jumping over 8%. This surge was fueled by reports that Anthropic PBC is in discussions with the chipmaker to establish a manufacturing partnership for custom AI chips.
SK Hynix also saw a substantial boost, with its shares climbing 7%. This resurgence comes as a counterbalance to the earlier part of the week, when both Samsung and SK Hynix were dragged down by global technology sell-offs and fears that the AI-driven bull market might have reached its peak. Despite the Friday gains, the index ended the week down by 3.84%.
Foreign Selling and Currency Volatility
Despite the optimistic movement in stock prices, the underlying market sentiment remains cautious, particularly regarding foreign institutional investment. According to Reuters, foreign investors emerged as net sellers, offloading shares worth 1,501.9 billion won.
This capital outflow coincided with a weakening of the South Korean won. The currency fell 0.28% against the US dollar, trading at 1,544.4 per USD on the onshore settlement platform. The won has faced significant pressure throughout the year, depreciating by 6.8% against the USD so far. In offshore trading, the one-month non-deliverable forward contract was quoted at 1,543.2.
Mixed Market Breadth and Bond Market Stability
The Friday session showed a divided market in terms of individual stock performance. Out of the 912 issues traded on the exchange, 406 shares advanced, while 471 declined, indicating that while heavyweights drove the index upward, the broader market sentiment was not uniformly bullish.
In the debt markets, there was a slight movement toward stability. September futures on three-year treasury bonds gained 0.08 points to 103.11. Yields also saw a marginal decline; the most liquid three-year Korean treasury bond yield slipped by 1.5 basis points to 3.732%, while the benchmark 10-year yield fell by 0.7 basis points to 4.173%.
Key Takeaways
- AI Optimism Drives Recovery: Samsung Electronics (+8%) and SK Hynix (+7%) led a 5.76% Kospi rally, fueled by potential AI chip manufacturing partnerships.
- Foreign Outflow Persists: Despite the index jump, foreign investors were net sellers of 1,501.9 billion won, adding to market volatility.
- Currency Pressure: The South Korean won continues its downward trend, having fallen 6.8% against the US dollar since the start of the year.