Driven by a sharp rebound in chip stocks, South Korea's stock market surged and hit a record high on Tuesday. At the same time, global markets have stabilized and concerns over the outlook for artificial intelligence (AI) spending have eased. Samsung Electronics rose about 11% during intraday trading on the Korean Exchange, its largest intraday gain since 2009. SK Hynix rose more than 9%. Both stocks recovered losses from the previous session. The Kospi rose more than 6%, extending its year-to-date gain to 25%, cementing its position as one of the world's best-performing stock indexes.
Since the beginning of this year, the stock prices of Samsung Electronics and SK Hynix have both increased by more than 35%, mainly benefiting from the increasingly clear market consensus that AI has huge demand for high-end memory chips.
"We believe yesterday's volatility in the Korean stock market is a healthy digestion of the previous gains," said Sojung Park, portfolio manager at Matthews International Capital Management. "We are still bullish on the Korean stock market from an earnings growth and valuation perspective."
In terms of capital structure, local institutional investors were the main driver of Tuesday's rebound, with foreign capital also net buying stocks, while retail investors sold off.
The rebound also brought the benchmark Kospi index back above 5,000 points, a target set by South Korean President Lee Jae-myung in his "valuation enhancement plan" last year. The Korean government and regulators have continued to promote corporate governance reforms to attract more global investors to return.
The rebound brought the Korea Composite stock price index back above the 5,000-point target set by the president last year. As part of plans to boost market valuations, governments and regulators have been working on corporate governance reforms in an effort to win back the favor of global investors.