Kosdaq gains momentum as chip stocks jitter

The KOSPI and Kosdaq are displayed in the dealing room of Hana Bank in Seoul, Tuesday. The benchmark KOSPI closed at 6,358.95, up 1.62 percent from the previous session, while the secondary Kosdaq closed at 780.72, up 5.88 percent. Yonhap

Korean stocks ended mixed Tuesday, as the tech-heavy Kosdaq extended its rally on expectations of stronger investor inflows while continued weakness in major chipmakers weighed on the benchmark KOSPI.

The benchmark KOSPI closed at 6,358.95, up 1.62 percent from the previous session. The index climbed to 6,389.40 shortly after the opening bell but reversed course later in the day.

Foreign and institutional investors sold a net 369.7 billion won ($257.7 million) and 539.1 billion won worth of shares, respectively. Retail investors, meanwhile, bought a net 810 billion won.

SK hynix rose 0.64 percent to close at 1,577,000 won, while Samsung Electronics gained 0.21 percent to finish at 240,000 won.

Sentiment toward memory chipmakers continued to weaken overnight following reports that China's largest memory chipmaker, CXMT, is considering building a new semiconductor plant in Beijing. Although details such as production capacity and investment size were not disclosed, the prospect of increased memory supply added downward pressure to chip stocks.

Still, U.S. memory chip stocks managed to rebound as analysts continued to point to signs that hyperscalers' artificial intelligence investments were translating into tangible revenue. Micron fell as much as 6.4 percent intraday before recovering to close 0.8 percent higher. Domestic memory chip stocks, however, continued to face profit-taking.

With large-cap chip stocks remaining under pressure, investors rotated into other sectors, including defense, construction and consumer shares.

The Kosdaq also extended its winning streak and outperformed the KOSPI for a second consecutive session. The Kosdaq rose 5.88 percent to close at 780.72. A buy-side sidecar was triggered at 10:28 a.m., marking the first time in Kosdaq history that the trading curb had been activated for three consecutive sessions.

Analysts expect more funds to flow into the secondary market as regulators introduce safeguards for single-stock leveraged exchange-traded funds tied to Samsung Electronics and SK hynix. The combined trading value of 16 products in the KOSPI plunged from 33.4 percent on Thursday to 6.6 percent on Friday, and 5.4 percent on Saturday, according to Kiwoom Securities.

The won weakened against the dollar. The won-dollar exchange rate closed at 1432.5 won per dollar, up 2.7 won from the previous session.