Korean stocks stage a violent rebound! KOSPI soars 14% in a single day, setting a record; Chey Tae-won makes a rare "bottom-fishing" move in SK Hynix. Can belief in AI reshape the market?

According to Zhihui Finance APP, after three brutal days of sell-offs earlier this week, the South Korean stock market staged an epic comeback today (Friday), with the benchmark KOSPI index surging as much as 14% during the session, marking the largest single-day gain in its history. Tech giants SK Hynix and Samsung Electronics led the rebound, soaring by 28% and 26%, respectively. Behind this dramatic reversal lies renewed confidence in the global AI investment narrative, as well as a rare “bottom-fishing” signal from top corporate leaders, which has temporarily pushed back a liquidity crisis triggered by high leverage.

Dual Catalysts Ignite the Rally: From “Deleveraging Stampede” to “Confidence Injection”

Early this week, the Korean stock market plunged into a technical bear market, with the KOSPI index tumbling 17% in just three trading days. There were two core triggers for the stampede: first, deep doubts about the returns from massive AI capital expenditures by global tech giants, and second, concerns over intensifying competition in memory chips from China. Additionally, the introduction of leveraged products in May amplified volatility, leading high-leverage funds to forced liquidations and causing a “fall–liquidation–further fall” death spiral.

However, on Friday, sentiment reversed by 180 degrees. Firstly, in the overnight US stock market, strong earnings reports from cloud computing giants like Microsoft and urgent support from Wall Street capital provided strong rebuttal evidence to the “AI bubble burst theory,” reigniting confidence in long-term infrastructure investment in artificial intelligence. Secondly, a highly symbolic market support action occurred in Korea — SK Group Chairman Chey Tae-won directly purchased 3,620 shares of SK Hynix in the open market, with a total value of about 4.79 billion Korean won (around $3.2 million). This was Chey Tae-won’s first time personally holding shares in the company; previously, he only held shares indirectly through SK Square. The market widely interpreted this move as a powerful endorsement of the company’s long-term value (especially its high-bandwidth memory business) by its leader, and as an indication that the stock price had been severely undervalued after the plunge.

Market Fundamentals and Outlook: Rebound or Trend Reversal?

Despite strong momentum, deeper structural issues remain in the market. Shawn Oh, head of equities at NH Investment & Securities, noted: “The accelerated sell-off of AI tech stocks driven by deleveraging, risk exposure reduction, and liquidation may now be stabilizing.” Data shows that as stock prices were halved, foreign investors are returning to South Korea’s more attractive valuations, while regulators have begun imposing limits on the maximum investment retail investors can make in single-stock leveraged ETFs in an effort to curb future extreme volatility caused by excessive leverage.

From an industry perspective, Samsung Electronics and SK Hynix still firmly occupy a central position in AI memory chip supply. Although SK Hynix’s Q2 financial results set a record high, they came in slightly below market expectations, showing that lofty valuations require even stronger performance to be digested. Analysts believe this rebound is mostly a technical correction and partial easing of the liquidity crisis after extreme overselling, rather than a comprehensive trend reversal. Whether the KOSPI can stabilize going forward will greatly depend on capital expenditure guidance from global tech giants and the cyclical movement of memory chip prices.