AI-Related Stocks Rebound Strongly: South Korean Market Soars 22% in 10 Days, Returning to Technical Bull Market

South Korea's stock market rose sharply on Thursday (13th), propelled by a global rebound in AI-related equities, allowing the benchmark index to swiftly recover from last month's historic plunge and move toward a technical bull market.

The Korea Composite Stock Price Index (KOSPI) surged as much as 4% during Thursday’s trading session, marking a cumulative rebound of over 22% from its July 30 low. Heavyweight memory chipmakers Samsung Electronics (005930KS) and SK Hynix (000660KS) led the rally, with both companies’ shares rising more than 4%.

Investor enthusiasm for technology hardware stocks has reignited as recent earnings reports from major global tech firms show that spending on AI remains at substantial levels. This marks a clear reversal in market sentiment compared to just a few months ago, when leveraged positions betting on chip stocks were forcibly liquidated—triggering temporary trading halts and causing retail investors to suffer billions of dollars in losses.

Recently, South Korea's government imposed restrictions on leveraged ETFs tied to individual stocks, while signs of investor deleveraging and declining margin loan balances have emerged, contributing to market stabilization.

Maxence Visseau, Chief Investment Officer at Dubai-based Arkevium Capital, noted that once leverage is cleared, markets often experience fierce rebounds. Forced selling pressure has subsided, short sellers are covering their positions for profit, and market makers are reducing downside hedging.

Year-to-date, the KOSPI index has gained over 60%. The index had plunged 22% in July, marking its worst monthly performance since the global financial crisis.