KOSPI jumps 4% as Samsung, SK Hynix rebound, but one risk still looms

South Korea’s KOSPI surged more than 4% on Thursday as investors piled back into Samsung Electronics and SK Hynix, extending a sharp rebound from July’s AI-led rout.

The benchmark rose 4.4% in morning trade after US inflation data came in as expected, reducing expectations for another Federal Reserve rate increase in September.

Overnight, Micron, Super Micro Computer and CoreWeave also rallied, reinforcing appetite for AI-linked shares.

Samsung and SK Hynix are drawing buyers back with depressed valuations, cleaner positioning and a memory cycle that still looks unusually tight.

Samsung and SK Hynix finally look too cheap to ignore

Samsung ended Wednesday up 6.7% and SK Hynix gained 5.5%, before both advanced early Thursday again.

Their recovery follows a brutal July sell-off that pushed each stock down more than 20%.

A report that Singapore’s Temasek was considering fresh direct investment in the pair added to sentiment.

Temasek did not confirm a new transaction, saying it had first invested in both companies more than two years ago.

Samsung trades at roughly 4.2 times forward earnings and SK Hynix at about 3.6 times, compared with more than 21 times for the Philadelphia Semiconductor Index.

Albert Yong, managing partner at Petra Capital Management, told Bloomberg that the two stocks had become “technically oversold despite still-strong fundamentals.”

He said the Temasek report was a confidence signal rather than the main reason for the rebound.

Foreign money is returning to the memory trade

Global funds bought nearly $2 billion of KOSPI shares on Wednesday while retail investors sold, highlighting how quickly overseas appetite has returned.

Ha Seok-keun, chief investment officer at Eugene Asset Management, told Bloomberg that a confirmed Temasek investment would represent strong foreign confidence in Korea’s AI and memory cycle.

The bank said in commentary that the memory cycle is likely to prove stronger and longer than previous upswings.

Accelerating AI-compute demand and persistent shortages could support chip prices and profits for longer than current valuations imply.

Positioning has also become less dangerous. Goldman estimates assets in Korean leveraged ETFs have fallen from a June peak of $53 billion to $25 billion, while retail margin-loan balances dropped from $25 billion to $19 billion.

One AI risk still hangs over the KOSPI

The rebound still rests on one crucial assumption that Big Tech keeps spending.

Goldman acknowledged that concerns around hyperscaler capital expenditure, financing capacity and rising competition remain valid.

That matters because Samsung and SK Hynix ultimately depend on Microsoft, Amazon, Meta, Alphabet and other large customers continuing to pour enormous sums into AI infrastructure.

That remains the central risk.

The concentration makes that risk more dangerous for Korea.

Samsung and SK Hynix together account for about half of the KOSPI, so a sharp change in sentiment toward the two companies can overwhelm the index.

July showed how violent that feedback loop can become. The KOSPI fell 22% during the month as AI concerns collided with leveraged-position unwinds.