South Korea’s stock market delivered its most dramatic single-session turnaround on record Friday, as the benchmark Kospi index surged 14% following a month of extreme volatility tied to global sentiment around artificial intelligence investments.
The sharp reversal, which LSEG data confirmed as the index’s largest one-day jump on record, lifted semiconductor giants SK Hynix and Samsung Electronics alongside the broader market. SK Hynix posted its own record single-session gain.
“The Korean stock market has been trading as if it has bipolar disorder, swinging from panic to euphoria almost overnight,” said Jung In Yun of Fibonacci Asset Management. “Today’s move looks like a violent reversal of an extremely crowded selloff.”
Tech Rally Sparks Confidence
The rebound came on the heels of a strong overnight rally in U.S. technology stocks, where upbeat earnings reports from Microsoft, Amazon and Meta reinforced investor expectations that corporate spending on AI infrastructure remains healthy. That sentiment carried directly into Korean equities, which have become tightly linked to the global AI trade through the country’s dominant chipmakers.
Additional momentum came from SK Group Chairman Chey Tae-won’s disclosure that he had purchased shares of SK Hynix, the world’s second-largest memory chipmaker. The move appeared to bolster confidence in the company’s outlook.
According to Jung, foreign investors drove much of Friday’s rally, with short-covering and mechanical rebalancing by leveraged exchange-traded funds amplifying the gains. New cash-deposit requirements for leveraged ETF investors that took effect July 31 may have also triggered repositioning ahead of the deadline.
Questions About Durability
Despite the dramatic bounce, Jung cautioned against expecting similar magnitude gains in coming sessions. “I would not expect gains of this magnitude to continue,” he told CNBC via email. “However, the rebound itself could have further room because positioning had become extremely bearish and SK Hynix’s underlying AI-memory fundamentals remain strong.”
The key test, Jung said, will be whether foreign buying persists once short-covering activity fades. Sustained overseas interest could signal a more durable recovery rather than a brief technical bounce.
Friday’s surge followed just days after Korean equities suffered one of their worst selloffs amid concerns over stretched AI valuations, rising leverage and signs of forced liquidations across global semiconductor stocks.
Rolf Bulk, a semiconductor analyst at Futurum Group, characterized the rally as reflecting improved confidence in the AI investment cycle rather than a fundamental shift in the sector’s outlook. “We’ve seen unprecedented volatility in the Korean stock market over the last month, culminating in this recovery on the final trading day,” Bulk said.
He added that recent forced selling appears to have largely run its course, noting that the AI infrastructure buildout shows no signs of slowing.
Leverage Concerns Persist
Not all observers view Friday’s rebound as a sign of stability. Paul Gambles, co-founder of MBMG Family Office Group, warned that the sharp rally could simply represent another violent swing within an increasingly unstable market.
“I think we’re going to get a lot more days like this,” Gambles said. “Asset prices are completely disconnected. It’s telling us that there’s a massive amount of leverage out there.”
Gambles cautioned that while Friday’s move could prove to be a one-day relief rally or extend somewhat longer, investors should not interpret it as evidence that risks surrounding the AI boom have disappeared. The combination of heavy leverage and fragile investor confidence could leave markets vulnerable to a larger correction, he warned.
“We’re not saying that this is it, but we’re saying this is a sign that if this isn’t it, it is coming down the track at some point, not too distant,” Gambles said.
For now, the question is whether overseas funds will continue buying after short-covering subsides. That answer may determine whether Friday marks the beginning of a sustained recovery or simply another dramatic chapter in what has become one of the world’s most volatile equity markets.
Source: www.cnbc.com — https://www.cnbc.com/2026/07/31/south-korea-kospi-samsung-sk-hynix-meltdown-record-rebound.html
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