South Korean stocks surge 22% in 10 days amid global rebound in AI trade
Enthusiasm for tech hardware stocks is returning on evidence of continued massive AI spending by global big tech firms
South Korean stocks soared by 22% over ten days as the global rebound in the AI trade prompted a sharp reversal from July's historic decline. The benchmark Kospi index climbed as high as 4.8% on Thursday, Aug 13, extending its gains from a low on July 30 to around a 22% increase. Leading memory chip manufacturers Samsung Electronics and SK Hynix witnessed significant jumps, each surging over 5%.
The enthusiasm for tech hardware stocks was reignited due to evidence of ongoing substantial AI investments by global major tech companies, following massive sell-offs during the previous months. The market sentiment had dramatically shifted after forced liquidations of leveraged chipmaker bets led to trading halts and the destruction of billions in retail wealth.
Recent government restrictions on single-stock leveraged ETFs and decreasing margin debt have contributed to market stabilization. "I believe the market overshot on the downside during the unwinding of leveraged positions, and the current rebound is a natural one as flow stabilizes," stated Kang DaeKwun, CEO of Life Asset Management.
However, he added that it will be challenging for the market to sustain a continued rally until there is some stabilization in the AI narrative and US interest rates. The Kospi has risen over 60% in 2026, driven largely by retail investments, but remains about 24% below its late June high. It plunged 22% in July, its worst monthly performance since the global financial crisis.
Foreign investors continue to be net sellers, withdrawing more than $100 billion from South Korean shares in 2026 as the market became overcrowded and overheated. Some foreign funds have started returning, though, as the sell-off drove valuations to more appealing levels. Even though the growing competition from China dampened the surge in memory stocks, the short-term demand outlook remains promising.
The spread of AI into new applications and widespread adoption is driving the demand for chips. "Because of AI agents and physical AI, memory demand has exploded, but we entered this limited supply capacity – that's where the bottleneck is," remarked Qian Zhang, an emerging markets equities investment specialist at Baillie Gifford.
"We're not saying the world will be building data centers forever at this speed, but that's a real physical bottleneck that only a few companies in the world can resolve."
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
