Foreign Investors Bet $3.8 Billion on Samsung, SK Hynix as Retail Traders Hold Back

Kospi Extends Rally as AI Spending Fears Ease

Samsung Electronics, SK Hynix Lead Advance

Major U.S. media outlets have begun describing South Korea's stock market as having entered a technical bull market, pointing to a sharp recovery. The Kospi has rebounded more than 20% in a little over 10 days as concerns over artificial intelligence spending eased and memory-chip shares led by Samsung Electronics and SK Hynix drove gains. Foreign capital has piled into large semiconductor stocks, lifting expectations for further upside in the benchmark index.

"Kospi Back in Full Greed Mode"

According to EpicAI, an AI-based investment information platform, the Kospi closed at 6,977.92 on Aug. 14, up 164.66 points, or 2.42%, from the previous session. Retail and institutional investors were net sellers of 1.8878 trillion won and 1.1413 trillion won, respectively, while foreigners were net buyers of 3.0549 trillion won. Over the past five trading days, the Kospi climbed from 6,299.66 to 6,977.94, rising more than 20% from its July 30 low. A gain of more than 20% from a recent low is typically viewed as the start of a technical bull market.

As the Kospi extended its rebound, foreign media outlets turned more positive on South Korean equities. Bloomberg reported on Aug. 13 that South Korean stocks had surged 22% in 10 days, with semiconductor shares led by Samsung Electronics and SK Hynix driving the advance. The report said earnings released at the end of July by Microsoft and Amazon, two of the biggest investors in AI, helped ease fears of a bubble. It added that the Kospi was signaling that the market had returned to "full greed mode."

The Wall Street Journal also wrote that the Kospi had entered a new bull market after rising more than 20% from its recent low. The rebound was driven in large part by a revival in global appetite for AI-related stocks this month. CNBC, citing LSEG data on stocks, bonds and corporate earnings, reported on Aug. 13 that the Kospi had rebounded about 23% from its low at the end of July.

The Kospi fell 22% in July, marking its worst monthly decline since the global financial crisis. Losses accelerated as concerns mounted over whether AI infrastructure spending could continue and leveraged positions in semiconductor shares were forcibly unwound. The rebound took hold as expectations returned that global companies would keep investing in AI. On Aug. 12, AI cloud company CoreWeave and AI server maker Super Micro Computer reported earnings that beat market estimates, sending their shares up 17% and 9%, respectively.

Renewed expectations for a recovery in memory demand tied to AI adoption have also lifted sentiment. Zhang Chen, an emerging-markets equity specialist at U.K.-based asset manager Baillie Gifford, told Bloomberg that demand for memory is surging with the rise of AI agents and physical AI, while supply capacity remains limited. That has created a supply bottleneck that only a small number of companies, including Samsung Electronics and SK Hynix, can resolve.

David Morrison, senior market analyst at U.K.-based online trading and investment platform Trade Nation, told CNBC that the AI investment boom is still far from over. Mark Newton, head of technical strategy at U.S. market research and investment firm Fundstrat Global Advisors, said the memory segment of the technology sector looks positive in the near term. Because Samsung Electronics and SK Hynix account for a large share of South Korea's stock market, a recovery in memory shares could power gains across the broader Kospi.

U.S. inflation data also helped revive appetite for the Kospi. July consumer prices matched market expectations, easing concerns over a September rate increase by the Federal Reserve. The cooling of leveraged liquidations, which had triggered last month's market selloff, also contributed to the rebound. Bloomberg said tighter government rules on single-stock leveraged ETFs and a reduction in margin trading had helped stabilize market flows.

Foreign Buying Drives Index Higher

Experts focused on the role of persistent foreign net buying in driving the index higher. With investor deposits, often seen as dry powder for retail traders, slipping below 100 trillion won, retail demand has remained sluggish. Foreign inflows have emerged as the key force behind the market's advance. Over the past three trading days, Samsung Electronics and SK Hynix dominated foreign investors' net purchases at about 3.6146 trillion won and 1.6087 trillion won, respectively.

Lee Jae-won, an analyst at Yuanta Securities, said most recent up days in the Kospi have coincided with foreign net buying. With investor deposits continuing to decline, retail flows alone would struggle to recreate the record-setting rallies in large-cap stocks seen in the past, he said. That makes foreign buying the central driver of the Kospi's rebound. An industry official said profits at Samsung Electronics and SK Hynix could climb to a new level if AI infrastructure investment lasts longer than expected and memory shortages persist. "The best moment for Samsung Electronics and SK Hynix has yet to come," the person said.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com