SK Hynix and Samsung Stocks Boost KOSPI by 4.5%

KOSPI rose by 4.53% by the close of Monday and reached 5,717.30 points on Tuesday morning. The jump prompted the Korea Exchange to halt program trading for five minutes: according to Yonhap, a buy-side sidecar was introduced at 10:13. This is the second such pause in six days – the first occurred on October 21, but it failed to hold, and all of KOSPI's gains were lost in two days.

Investor sentiment improved after the rise of AI company stocks in the US market overnight: chipmakers set the tone for the American session on Monday. Philadelphia Semiconductor rose by 2.82%, Nasdaq Composite added 0.82% to 26,169.38 points, and S&P 500 increased by 0.70% to 7,676.77.

Oil supported the growth. Brent became cheaper after negotiations between officials from Saudi Arabia, Pakistan, and Turkey in Tehran: on Tuesday morning, a barrel cost $114.64, 1.01% lower than the previous day, but 17.28% higher than a month ago.

In Seoul, memory manufacturers led the growth. By 10:35, SK Hynix shares rose by 7.14% to 1.366 million won, Samsung shares by 4.93% to 223,500 won. KOSPI showed the best performance among Asian exchanges: Nikkei 225 rose by 1.96% to 63,407.69, TAIEX by 0.47% to 46,260.03. On October 15, the gap was the opposite: KOSPI fell by 7.57%, Nikkei by 4.90%, TAIEX by 3.41%. Due to the high share of memory manufacturers, KOSPI's dynamics amplify AI sentiment in both directions.

What restrains growth

The rebound began after the sell-off of chipmaker stocks: on Monday, KOSPI closed about 40% below its June peak, and foreign investors sold assets worth 695.5 billion won net in one day. On Sunday, Goldman Sachs lowered KOSPI's target from 12,000 to 9,000. According to the bank's calculations, current chipmaker valuations imply a 65% drop in sector profits by 2027, although the bank itself considers such a forecast overly pessimistic.

SK Hynix will present its third-quarter results on October 28, Samsung on October 29. Memory manufacturers account for almost half of the index, so private investors still risk being hit by negative reports.

A clear forecast for memory prices by 2027 would support Goldman's position. If expectations remain weak, the market will continue to factor in a 65% profit decline, and then Tuesday's growth may quickly fade, as it did on October 21.