South Korea's 'bipolar' stock market: meltdowns, a record rally and what's to come
South Korea’s stock market saw its sharpest one-day reversal on record this Friday, capping off a month of extreme volatility. The benchmark Kospi index surged 14% as investors reacted to a strong overnight rally in United States technology stocks. This rebound provided much-needed relief after recent sessions of heavy selling, which left many portfolios reeling.
Major companies led the charge, with SK Hynix and Samsung Electronics experiencing significant gains. The move followed positive earnings reports from Microsoft, Amazon, and Meta, which reinforced the belief that demand for artificial intelligence infrastructure is still high. Additionally, the move by SK Group Chairman Chey Tae-won to purchase shares of SK Hynix helped stabilize investor confidence.
Analysts suggest that the rally was largely driven by foreign buying, short-covering, and technical rebalancing by leveraged exchange-traded funds. New cash-deposit requirements for these funds also likely played a role in the sudden market repositioning.
Despite the positive day, some market experts caution that the broader environment remains unstable. While the initial panic has subsided, the disconnect between asset prices and underlying indicators suggests that investors should anticipate further volatility in the coming weeks. The primary test remains whether foreign interest continues beyond this short-term technical bounce.