On Friday, South Korea's stock market saw a historic turnaround, with the benchmark Kospi index soaring 14%, marking its largest single-day increase. This surge followed a significant rally in U.S. tech stocks, buoyed by strong earnings reports from major companies like Microsoft, Amazon, and Meta, which reinforced optimism about ongoing investments in artificial intelligence infrastructure.
Notably, SK Hynix and Samsung Electronics also experienced substantial rebounds. Analysts, including Jung In Yun from Fibonacci Asset Management, described the market's behavior as erratic, likening it to 'bipolar disorder' due to its rapid shifts between panic and euphoria.
The rally was largely driven by foreign investors, alongside short-covering and mechanical rebalancing from leveraged exchange-traded funds, which have been influenced by new cash-deposit requirements implemented on July 31.
While some experts, like Rolf Bulk from Futurum Group, expressed confidence in the sustainability of the AI investment cycle, others, including Paul Gambles from MBMG Family Office Group, cautioned that the market remains unstable and could face further corrections due to high leverage and fragile investor sentiment.
The future trajectory of the market will depend on whether foreign buying continues after the initial short-covering fades, which could indicate whether this rebound is a temporary relief or the beginning of a more stable recovery