South Korean stocks rebounded sharply after intense selloff, with KOSPI index increasing as investors shifted focus to chipmaker earnings. The recovery, led by Samsung Electronics and SK Hynix, came after a dramatic decline that saw the index drop nearly 10% on June 23, triggering a trading halt due to concerns over tech sector overheating.
Samsung and SK Hynix account for over 50% of the KOSPI's market cap, making their performance pivotal. Earlier in June, the index surged 8.2% in one day, only to plummet by 9.99% later, as both stocks lost more than 12% each. Recent valuations reveal a dynamic shift, with SK Hynix briefly surpassing Samsung amidst rising demand for AI memory chips.
Despite the KOSPI dropping 15% from earlier highs, this rebound was supported by substantial earnings reports. SK Hynix recorded record revenues of 97 trillion won (approximately $63.1 billion) for 2025 and net profits of 42.9 trillion won ($27.9 billion). However, concerns about market concentration risks remain as foreign investors exited en masse amidst volatility.
Warnings from South Korean authorities about tech overvaluation suggest that investing in Korean chipmakers for AI exposure may carry significant market and policy risks. This concentration within the market makes the KOSPI fragile, as evidenced by its rapid fluctuations.