South Korean shares experienced a significant surge on Friday, with the benchmark Kospi index closing almost 18% higher. This rebound partly reversed a three-day market downturn that had wiped hundreds of billions of dollars from the country's stock market valuation. The recovery was primarily driven by strong performances from leading chip manufacturers SK Hynix and Samsung Electronics.
The positive market sentiment emerged after encouraging earnings updates from US technology giants Amazon and Microsoft. These reports helped to boost optimism regarding the substantial investments being channeled into artificial intelligence (AI) technologies. South Korean regulators also announced specific measures aimed at curbing the week's earlier sell-off, contributing to the market's stabilization.
This market volatility in South Korea reflects a broader trend of increased retail investor participation and significant interest in technology stocks. The Kospi index, known for its heavy weighting in technology companies, had more than doubled in value this year before the recent correction. Despite the series of significant falls since reaching a record high in mid-June, the index remains more than 50% higher than its value at the end of 2025.
SK Hynix, a key supplier to the prominent AI chip firm Nvidia, saw its shares gain almost 30% during Friday's trading. Similarly, Samsung Electronics recorded a 28% increase in its share price. Both companies had experienced a slump in their stock market value earlier in the week as a broader sell-off in AI-related stocks intensified. Investors had expressed concerns over the massive capital being poured into AI by major technology firms.
The rally in AI-related companies' shares was directly linked to Amazon and Microsoft exceeding their earnings expectations. On Thursday, Amazon's stock jumped by over 9% in after-hours trading in New York, while Microsoft gained more than 15%. These strong performances reassured investors about the future prospects of AI investments.
The South Korean market has seen particular volatility this year, attracting a large number of retail investors. The tech-heavy Kospi has been temporarily halted multiple times under its circuit breaker mechanism. This mechanism is designed to calm panic selling and prevent extreme market movements. The recent rebound indicates a renewed confidence in the technology sector, particularly in companies poised to benefit from the ongoing AI revolution.
Moving forward, market participants will closely monitor further earnings reports from global technology firms and any additional regulatory interventions. The sustained interest in AI investments will likely continue to influence the performance of chipmakers and other technology stocks. Investors will also watch for signs of stability in global economic conditions, which could impact overall market sentiment in South Korea and beyond.