South Korea's Kospi index entered a technical bull market on Thursday after jumping over 4% in early trade, extending its rebound from a July 30 low to roughly 23%. Chip giants Samsung Electronics and SK Hynix led the advance as a global revival in AI-related spending lifted memory stocks out of last month's sell-off.
South Korean stocks rallied Thursday, lifting the benchmark Kospi into a technical bull market as a global revival in the AI trade fuels a sharp recovery after last month's historic sell-off. The index jumped over 4% in early trade, taking its rebound from its July 30 low to roughly 23%, according to LSEG data.
Samsung and SK Hynix lead the advance
Index heavyweights Samsung Electronics and SK Hynix led the gains, rising over 4% and 7%, respectively. Investor appetite for technology hardware stocks is returning as the latest earnings from global tech giants point to continued heavy spending on artificial intelligence. Supermicro and cloud provider CoreWeave surged overnight following better-than-expected results. According to Trade Nation's David Morrison, in a note late Tuesday: "The AI spending boom is far from over."
Fundstrat sees room for further gains
The rally has room to run further as strength returns to the country's heavyweight memory chipmakers, according to Fundstrat Global Advisors. Mark Newton, the firm's head of technical strategy, said the iShares MSCI South Korea ETF has broken above a key technical level on the back of gains in Samsung and SK Hynix, improving the near-term outlook for Korean equities.
Memory shares, among the hardest hit during the recent technology sell-off, are beginning to outperform the broader tech sector for the first time since June, Fundstrat said. Newton called that a good sign in the short run for memory stocks within the technology sector, adding that the group appears to be one of the last major corners of tech to begin turning higher. Fundstrat said the combination of South Korea's rebound and the recovery in memory chips is broadening a rotation back into technology, even as some major U.S. tech names have struggled.
Newton remains bullish on the market in the near term. However, he cautioned that the rally could lose momentum later this month if U.S. Treasury yields and the dollar begin climbing again. For now, he said South Korea and memory stocks look to be the right vehicles for near-term risk-on exposure.
Source: CNBC
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