Today, South Korean stocks experienced a strong rebound. As of press time, the KOSPI index rose over 5%, currently standing at 6,848.81 points. Among individual stocks, SK Hynix surged more than 12%, and Samsung Electronics climbed over 8%. During the session, the Korea Exchange initiated the Sidecar mechanism, temporarily halting programmatic buy orders for the KOSPI.
In Hong Kong, CSOP Leveraged and Inverse Series - CSOP Samsung ETF (2X) rose over 8%, and CSOP SK Hynix ETF (Daily (2x) Leverage) gained nearly 4%.
Multiple Positive Factors Converge
The immediate catalyst for this surge came from policy changes in the U.S. Treasury market.
On Wednesday, U.S. Treasury Secretary Basset announced that the single-repurchase size for long-term Treasury bonds with maturities of 10 to 30 years will be at least doubled from $2 billion to $4 billion to suppress yields at multi-decade highs. Following the news, as of press time, the 30-year Treasury yield fell back to 5.18%, while the three major U.S. stock indexes closed slightly higher overnight.
Analysts believe the signal of "intervening when necessary" released by this move is more significant than the repurchase itself. Matt Maley, Chief Market Strategist at Miller Tabak & Co., stated the measure "has the potential to boost risk asset prices in the short term."
Market sentiment towards risk assets has warmed somewhat, leading to a strong technical rebound in the South Korean stock market. According to Korea Exchange data from the 20th, as of 10:00 AM, foreign investors made a net purchase of 682.341 billion won, institutional investors a net purchase of 750.326 billion won, while retail investors net sold 1.445809 trillion won.
Positive factors also formed support at the individual stock level.
On August 19, SK Hynix announced it will repurchase and cancel approximately 24.07 million treasury shares over the next three months, totaling 40 trillion won (approximately $286 billion), accounting for 3.3% of its issued shares. The company also raised its shareholder return target for 2025-2027 to over 50% of cumulative free cash flow, with more dividend details to be disclosed alongside its Q3 earnings report.
SK Hynix stated that this move stems from the company's belief that its current stock price does not fully reflect its intrinsic value. The company had a net cash position of approximately 69 trillion won at the end of Q2, sufficient to support large-scale returns to shareholders.
Hanwha Investment & Securities analyst Park Jun-young indicated that the 40 trillion won buyback is highly unlikely to be a one-off shareholder return. "We expect this measure will lead to a sustained reduction in the number of shares outstanding, driving per-share value higher."
Notably, another semiconductor giant, Samsung Electronics, also saw a stream of positive news. Due to surging demand, Samsung is reportedly raising prices for new orders for some advanced chip foundry services by up to 15%, extending the price hike logic from memory to foundry services. Samsung also stated it will "soon" disclose details of its shareholder return policies for this year and beyond. Reportedly, the company plans to convene a board meeting within August to finalize and announce a shareholder return policy reaching the scale of 100 trillion won (approximately $719 billion), which would be the largest in South Korean corporate history.
Upgrading South Korean Stocks to Overweight
So far this year, South Korean stocks have experienced a rare rollercoaster ride. Driven by the AI memory supercycle and "Value-up Program" reforms, the KOSPI index once hit a record high above 9,100 points in June, more than doubling its value within half a year. However, since late June, the market plunged sharply under pressure from concerns about AI capital expenditure, profit-taking, and other factors, retreating over 30% from its July peak at one point. Even so, the KOSPI's year-to-date gain still exceeds 57%, making it one of the best-performing major global indices.
Herald van der Linde, Head of Asia Pacific Equity Strategy at HSBC, stated that the previous correction effectively cleared out substantial excess leverage. "South Korean stock market volatility remains high but has retreated from its peak." The bank upgraded its rating on South Korean stocks from Neutral to Overweight, believing that as long as domestic demand remains resilient, mechanical selling by foreign investors should not become a major headwind.
Additionally, due to strong business driven by artificial intelligence, S&P upgraded South Korea's SK Hynix rating to "A-".
SK Group Chairman Choi Tae-won stated directly that the "most severe memory shortage" will erupt next year, as new capacity additions can hardly keep up with the speed of demand explosion. According to calculations by TrendForce, the global HBM market size in 2026 is expected to grow 120% year-on-year, with a supply gap as high as 15% to 20%. Channel research by Bank of America also indicates that the memory price hike wave is far from over, with NAND spot prices rising up to 10% in a single week, 1Tb wafer quotes soaring over 500% year-on-year, and DRAM spot prices having risen for 18 consecutive weeks.
Regarding this, Paul Meeks, Head of Technology Research at Freedom Capital Markets, believes that AI-driven memory demand and long-term customer agreements continue to support industry fundamentals, but market concerns over high valuations and the potential peaking of the memory chip price cycle have exacerbated short-term volatility.
Market participants caution that after the sharp rally, short-term profit-taking pressure may emerge. Third-quarter earnings delivery, the U.S. interest rate path, and external disruptions could all intensify market volatility.
