Enthusiasm for tech hardware stocks is returning on evidence of continued massive AI spending by global Big Tech firms in the latest results.
A revival in the global AI trade pushed South Korean stocks into a technical bull market, marking a dramatic turnaround from last month’s historic rout.The benchmark Kospi gained 3.6 per cent on Thursday, extending its gain from a July 30 low to around 22 per cent. Heavyweight memory chipmakers Samsung Electronics Co and SK Hynix Inc drove the advance, each jumping nearly 5 per cent or more. Enthusiasm for tech hardware stocks is returning on evidence of continued massive AI spending by global Big Tech firms in the latest results. Sentiment has sharply turned around from the past few months, when forced liquidations of leveraged chipmaker bets triggered trading halts and wiped out billions of dollars in retail wealth. Recent government curbs on single-stock leveraged ETFs and signs of investors reducing margin debt have helped stabilise the market.“I think the market overshot to the downside during the unwinding of leveraged positions, and the current rebound is a natural one as flow stabilised,” said Kang DaeKwun, chief executive officer at Life Asset Management. “That said, I think it will be difficult for the market to sustain a continued rally until we see some stabilisation in the AI narrative and US interest rates.”A subdued US inflation report on Wednesday provided a fresh tailwind, as eased concerns about imminent interest-rate hikes by the Federal Reserve supported US-listed chip peers. Expectations that Samsung and SK Hynix will soon announce shareholder return plans have also lifted sentiment in recent sessions.The Kospi is up more than 60 per cent so far this year on a largely retail-driven rally, yet remains about 25 per cent down from its late June peak. It tumbled 22 per cent in July in its worst month since the global financial crisis.Last month’s market turmoil spurred a record number of trading halts as intra-day swings of more than 5 per cent in the Kospi became commonplace. A sense of calm has started to return, with a gauge of volatility falling to its lowest level since April.Turbulence receded as regulators stepped up measures to curb frenzied demand from individual traders for the single-stock leveraged ETFs tied to chipmakers. Daily turnover in these products has plummeted under new minimum cash deposit requirements.Foreign investors were buyers of Korean stocks Thursday but remain sellers year to date, having withdrawn more than $100 billion as the market grew crowded and overheated. Some overseas funds started to come back as the selloff drove valuations down to more attractive levels.While the rising threat of competition from China had also thrown some cold water on the blistering surge in memory stocks, the near-term demand outlook remains intact. The spread of AI into new applications and greater everyday usage is fueling greater need for chips.“Because of AI agents and physical AI, memory demand has exploded, but we entered into this with a quite limited supply capacity — that’s where the bottleneck is,” said Qian Zhang, emerging markets equities investment specialist at Baillie Gifford. “We’re not saying the world will be building data centres forever at this speed, but that is a real physical bottleneck that only a few companies in this world can resolve.”More stories like this are available on bloomberg.comPublished on August 13, 2026
