South Korea’s KOSPI extended one of the sharpest turnarounds in global equities, briefly climbing back above 7,000 on Friday after Samsung Electronics and SK Hynix led a powerful rebound in memory chip stocks. The benchmark has now rallied about 22% from its July 30 low, crossing the conventional threshold for a bull market and reversing much of the brutal July selloff that marked its worst monthly performance since the global financial crisis.
On Thursday, the KOSPI rose as much as 4.8% and closed with a 3.6% gain, while Samsung Electronics and SK Hynix each jumped more than 5%. On Friday, the index opened 2.7% higher at 6,995.67 and briefly touched 7,010.86, its first move above 7,000 since July 24. Samsung gained about 1% early in the session and SK Hynix advanced more than 5%.
KB Securities analyst Jeff Kim said both chipmakers were trading at extremely undervalued levels relative to their earnings outlook. Based on Wednesday’s close, Samsung Electronics traded at 3.7 times its 2027 estimated price-to-earnings ratio and SK Hynix at 3.2 times. Analysts forecast 2027 operating profit of 575 trillion won for Samsung and 389 trillion won for SK Hynix, representing 13.2 times and 8.2 times their 2025 levels respectively. Kim added that upcoming shareholder return policies could support share prices, with Samsung’s shareholder returns over the next three years expected to total at least 600 trillion won and a dividend yield above 7%.
Near-term earnings estimates also strengthened sentiment. Samsung is projected to post third-quarter 2026 operating profit of 112 trillion won, up 817% year-over-year, while SK Hynix is expected to report 77 trillion won, up 579% year-over-year. Both companies have committed more than 60% of their output to five-year long-term agreements with hyperscalers as AI-driven memory demand remains strong and memory supply stays tight.
Macquarie analysts described much of July’s decline as a positioning and fund-flow shock rather than a collapse in semiconductor fundamentals, pointing to continued AI infrastructure demand and tight memory supply as support for Korea’s two largest chipmakers. South Korean regulators have since tightened access to single-stock leveraged ETFs and margin requirements, potentially reducing one source of the extreme swings seen during the summer selloff.
Cooling US inflation provided additional relief. US producer prices were unchanged in July after falling 0.1% in June, while annual PPI inflation slowed to 4.7% from 5.5%. Combined with softer consumer inflation and weak July employment data, the reports lowered fears of imminent Federal Reserve rate increases and pushed the implied probability of a September Fed hike toward one-third.
Despite the rebound, risks remain. The KOSPI is still about 24% below its late June peak, and foreign investors have pulled more than 100 billion dollars from Korean shares this year. Analysts warn that heavy concentration in semiconductor companies leaves the market vulnerable to any shift in AI spending sentiment. Brent crude traded near 87 dollars a barrel, and the yen remained near 159.4 per dollar as markets priced an increasing chance of a September Bank of Japan hike.
