KOSPI Surges 5%, Triggering Buy-Side Call on Renewed AI Investment Hopes

South Korea's KOSPI index experienced a sharp rebound on July 10, surging over 5% and triggering a "buy-side call" mechanism, which temporarily suspends program trading to stabilize the market. This significant recovery comes after a steep decline of more than 10% in the preceding two trading days.

The market's turnaround is largely attributed to a renewed sense of optimism surrounding artificial intelligence (AI) investments. Investor confidence appears to have been bolstered by positive developments in the US market, where major semiconductor and big tech stocks showed strong performance. Specifically, Micron Technology's announcement of a $250 billion investment plan in the US and Meta's increased investment in its own AI chip production contributed to easing concerns about the AI industry.

On the KOSPI, leading companies such as Samsung Electronics and SK Hynix saw significant price increases, rising 6.47% and 2.70%, respectively. Related stocks like SK Square and Samsung Electro-Mechanics also posted strong gains. The positive sentiment extended across the market, with most stocks trading in positive territory. Out of 917 listed stocks, 830 saw price increases.

Kiwoom Securities analyst Han Ji-young noted that factors causing market anxiety, such as concerns over AI investments and rising interest rates, have been easing since the middle of the week. The KOSDAQ index also followed suit, climbing over 6% and triggering its own buy-side call, marking the 19th instance of a trading halt mechanism this year, matching the total from the 2008 global financial crisis.

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Factors that caused market anxiety, such as the recovery of AI investment expectations and the stabilization of interest rate hikes, have been easing since the middle of this week.