Record-breaking plunge followed by a "big rebound"! Two major chip giants surge aggressively, South Korea's stock market soars 12% in a single day

Reuters Finance APP notes that after experiencing a record single-day decline, the South Korean stock market rebounded on Thursday, with bargain hunters returning to this market battered by panic selling.

As of press time, the benchmark Korea Composite Stock Price Index (Kospi) surged as much as 12%, marking its largest intraday gain since October 2008, after experiencing a roughly similar decline on Wednesday. Leading the country and outperforming globally since early last year, chip giants Samsung Electronics and SK Hynix both rose over 13%.

Thursday’s movement signaled a rapid reversal of the situation, as South Korean stocks had fallen into a bear market in just a few trading days. After a global rally driven by AI trading and corporate governance reforms, the market was hit hard amid widespread risk aversion triggered by tensions in the Middle East, with South Korea bearing the brunt of the sell-off.

Gerald Gan, Chief Investment Officer at Reed Capital Partners, said, “This move largely reflects the involvement of technical traders. The market has fallen nearly 20% from its peak in just a few days, making it one of the most severely affected markets in Asia, with traders stepping in to buy the dip.”

“It’s still unclear whether this marks a true turning point for further gains or is merely a bear market rebound, especially as geopolitical tensions in the Middle East continue to escalate.”

South Korean Stocks Rebound After Record Crash

Futures surged at the open, prompting regulators to temporarily halt program trading on the Kospi and Kosdaq markets. During early trading, foreign and retail investors were net buyers of Kospi stocks, while local institutions sold off.

Earlier this week, the decline was driven by soaring oil prices due to the Iran conflict, which raised concerns about inflation and potential growth slowdown. For South Korea, this exposed the risks of crowded trades being quickly unwound—exacerbating the sell-off, especially when traders used leverage to make large bets. As the Middle East crisis potentially worsens, markets remain anxious.

Despite the plunge, the Kospi index has still gained over 30% this year. Investors are weighing whether this volatility signals the end of an overheated rally or the beginning of a more selective opportunity phase in this fourth-largest Asian economy.

Rob Li, Managing Partner at New York-based hedge fund Amont Partners, said, “These sell-offs, especially over the past two days, are entirely driven by positioning rather than fundamentals.”

Li believes that after the crash, selectively buying Korean stocks presents a good opportunity. “When it comes to picking companies, we want to be very precise,” he said, adding that SK Hynix meets the criteria given its strong free cash flow generation and reasonable valuation.