KOSPI's Shocking Rebound: Is Korea's Brutal Chip Rout Finally Over?

The KOSPI index in South Korea has made a stunning rebound, rising by over 22% from its July low. This rapid turnaround has caught markets off guard, with some analysts attributing it to a positioning and fund-flow shock rather than a fundamental collapse in semiconductor fundamentals.

Macquarie analysts believe that strong AI infrastructure demand and tight memory supply continue to support the earnings case for Korea's two largest chipmakers, Samsung Electronics and SK Hynix. The latter has seen its stock price jump by over 5% in early trading, making it one of the biggest beneficiaries of the rebound.

The turnaround is also attributed to renewed demand for AI memory chips, which has been driven by cooling US inflation data. The decline in producer prices and consumer inflation rates has reduced fears of an imminent Federal Reserve increase, providing a boost to the market.