South Korean shares bounced back strongly on Friday after one of the roughest weeks local investors have seen in some time.
Both of the country's main indexes, the benchmark KOSPI and the tech heavy KOSDAQ, had fallen for seven consecutive trading sessions heading into Friday, as investors grew nervous about elevated valuations in semiconductor and technology shares. On Friday, that selling pressure reversed. The KOSPI rebounded by nearly three percent and the KOSDAQ jumped three point one eight percent, snapping the losing streak.
Three factors drove the turnaround, according to market analysts. First, bargain hunting: domestic retail and institutional investors moved back into shares that had become noticeably cheaper after the seven day slide. Second, improved sentiment following a positive session on Wall Street, where major U.S. indexes closed higher Thursday. Third, a retreat in U.S. Treasury yields eased some of the pressure that had been weighing on global risk assets, including South Korean chip stocks. Semiconductor companies, which make up a large share of the South Korean market and are closely tied to global demand for the chips that power artificial intelligence systems, had been among the hardest hit during the losing streak and were among the shares attempting to recover on Friday.
South Korea's market has become something of a bellwether for global sentiment toward AI related investment over the past couple of years, given how central its chipmakers are to the semiconductors that go into AI data centers worldwide. Sharp swings like this week's, first a seven session decline and then a near three percent one day rebound, illustrate how sensitive these shares have become to shifts in interest rate expectations and global risk appetite.
Watch whether Friday's rebound holds into next week, and how South Korea's major chipmakers perform as global investors continue to weigh AI spending against the risk of interest rates staying higher for longer.
Why do South Korean stocks move so much on global AI sentiment?
South Korea is home to major semiconductor makers whose chips are central to global AI data centers, so their shares tend to track swings in AI investment enthusiasm.
What is the difference between the KOSPI and KOSDAQ?
The KOSPI is South Korea's main benchmark index of larger, established companies, while the KOSDAQ tracks smaller, often tech focused firms, similar to the Nasdaq in the United States.