South Korea’s stock market lurched sharply higher on Tuesday. The benchmark KOSPI jumped more than 5% at the open as chipmakers rebounded from a punishing stretch, forcing the exchange to briefly halt computer-driven buying.
A rebound at the opening bell
The KOSPI opened at 5,247.22, up 4.55%, and touched 5,300.92 at its peak, a gain of more than 5.6% on Monday’s close of roughly 5,019. Within minutes, the Korea Exchange triggered a buy-side “sidecar” at 9:06 a.m., suspending program buy orders in the main market for five minutes. The smaller, tech-heavy KOSDAQ followed four minutes later.
A sidecar is a cooling-off device. When futures prices spike, it pauses automated orders so the market can catch its breath. This one was the first on the KOSPI in nine sessions and the first on the KOSDAQ in 17. By later in the morning, gains had narrowed to roughly 3% to 4%, according to Korean media reports.
Chipmakers lead the way
Samsung Electronics and SK Hynix did most of the lifting. Samsung climbed about 5% to around 200,000 won, regaining that level for the first time since 6 November. SK Hynix rose between 5% and 8% at various points in the session and broke through 1.2 million won. Related shares, including SK Square and Samsung Electro-Mechanics, rose even more.
Foreign investors, who had been heavy sellers, returned. They were net buyers of about 165.6 billion won in the KOSPI market, the first time in eight sessions they had bought on balance. From 30 October to 9 November, they had sold an average of 1.79 trillion won a day.
Why the reversal
The trigger came from New York. On Monday the Nasdaq Composite gained 2.74%, and the Philadelphia Semiconductor Index jumped about 6.85%, according to market reports. A drop in oil prices helped lift sentiment across Wall Street.
Seoul had been moving in the opposite direction. The KOSPI fell for three straight sessions after the US midterm elections, in which Democrats won big and investors began to worry about tougher scrutiny of data-centre spending. Because memory chips are central to AI servers, any threat to that spending hits Korean stocks quickly. Local analysts described Tuesday’s move as bargain-hunting after steep falls, led by semiconductors.
Japan joins in
Japan’s Nikkei 225 moved above 60,000, gaining around 3% in early trade. Chip-linked names led the way, with SoftBank Group up about 11% and Kioxia about 8% at one point, according to early reports.
A rally with a record of fading
Caution is warranted. Buy sidecars have fired several times this autumn, and earlier rallies did not last. The KOSPI closed up 3.29% at 5,735.66 on 21 October. A week later, it surged 6.63% to 6,012.44 after SK Hynix reported a record quarter. The next day, Samsung’s shareholder-return plan disappointed investors, and the index slid back below 6,000. By 5 November, it had closed at 5,383.80, below where the October rally began.
Korean retail traders also make the market sensitive to sharp swings, so a strong open does not guarantee a strong close.
The US inflation test
The next catalyst arrives today. The US Bureau of Labor Statistics releases the October consumer price index at 8:30 a.m. Eastern time, which is 7 p.m. in India. Economists expect prices to have risen 0.3% from September, with core inflation up 0.2%. No annual rate will be published, because last year’s government shutdown left a gap in the data.
The numbers matter because the Federal Reserve is widely expected to raise rates when it meets on 8 and 9 December. CME FedWatch data cited by CNBC put the odds of a quarter-point increase above 80%. A Citigroup economist told Reuters that the main thing that could stop the Fed would be a further substantial fall in equities or a widening in credit spreads. In other words, rough markets could change the Fed’s path, and the Fed’s path could in turn move markets.
Indian investors have no direct trading read-through today. The NSE and BSE are closed for Diwali-Balipratipada, and they reopen tomorrow.
What to watch
Three things will tell investors whether this rally is sturdier than the last: whether foreign buying continues, whether Samsung and SK Hynix hold their gains, and how US inflation data lands. This article is for information only and is not investment advice.
