KOSPI rockets 18% in record-breaking rally

KOSPI is displayed in the dealing room of Hana Bank in Seoul, Friday. The benchmark index closed at 6,595.45, up 17.91 percent from the previous session. Yonhap

KOSPI surged nearly 18 percent on Friday to reclaim the 6,500 level, posting record gains in both percentage and point terms as chip stocks staged a dramatic rally.

The benchmark closed at 6,595.45, up 17.91 percent from the previous session. It jumped immediately after the open, triggering a buy-side sidecar at 9:06 a.m., and extended gains through the session.

The only other time KOSPI rose more than 10 percent in a single day was Oct. 30, 2008.

Foreign and institutional investors led the buying, snapping up a net 7.22 trillion won ($5.06 billion) and 1.18 trillion won in shares, respectively. Retail investors, meanwhile, net sold 8.25 trillion won.

SK hynix surged 29.95 percent to close at 1,718,000 won. Korea's second-largest company by market value touched the 30 percent daily limit during the session. Samsung Electronics also jumped 26.81 percent to 262,500 won, its biggest daily percentage gain on record.

The rally erased losses from the previous three sessions. SK hynix had fallen 29.9 percent and Samsung Electronics 19.34 percent over the three trading days through Thursday.

Stronger-than-expected cloud results from U.S. technology companies including Microsoft and Amazon helped fuel the rebound, easing concerns about slowing chip demand as Big Tech's spending on artificial intelligence data centers began translating into revenue.

A share purchase by SK Group Chairman Chey Tae-won also appeared to support sentiment. Chey disclosed Thursday that he had bought 3,620 SK hynix shares worth about 4.9 billion won on the open market, just below the 5 billion won threshold requiring disclosure 30 days in advance. It was his first personal investment in SK hynix shares.

Technology hardware stocks rallied, led by printed circuit board and component makers, including Samsung Electro-Mechanics. Power equipment stocks such as LS Electric and HD Hyundai Electric advanced on expectations of increased investment by U.S. technology companies.

Analysts said an easing of excessive concerns had created room for a near-term rebound, while warning that volatility in artificial intelligence and semiconductor shares was likely to persist.

"KOSPI's failure to hold on to a gain of more than 5 percent the previous day — despite an initial rally fueled by Samsung Electronics' upbeat conference call — suggests the market may face an overhang from investors looking to sell into rebounds to recoup losses," said Han Ji-young, an analyst at Kiwoom Securities.

Meanwhile, tighter regulations on single-stock leveraged and inverse exchange-traded funds (ETFs) took effect Friday, including an increase in the minimum cash deposit requirement to 30 million won from 10 million won.

Mixo Das, Asia equity strategist at JPMorgan, said in a Friday note that the Korean market had entered an attractive buying range. He cited low valuations and estimated that deleveraging by leveraged ETFs was effectively complete, while hedge funds had already reduced their leverage by about 90 percent.

The secondary Kosdaq climbed 11.63 percent to close at 719.76.

The won strengthened against the dollar, with the exchange rate closing at 1,424.0 won per dollar, down 13.4 won from the previous session.