South Korean Stocks Skyrocket in Record-Breaking Rally

South Korea's stock market experienced a historic surge on October 31, with the benchmark KOSPI index climbing an astonishing 17.91% to close at 6595.45. This represents the largest single-day increase in both percentage and points in the index's history, shattering previous records. The dramatic turnaround followed three consecutive days of steep declines, highlighting the extreme volatility currently gripping investors.

The rally was largely fueled by a massive influx of foreign investment. Foreign investors purchased a net of 7.2 trillion won (approximately $5.3 billion) in South Korean stocks, absorbing the majority of shares sold by domestic individual investors, who offloaded about 8.3 trillion won. Key beneficiaries of this buying spree were semiconductor giants Samsung Electronics and SK Hynix. Samsung Electronics saw its stock price jump 26.81%, while SK Hynix hit the daily upper limit, closing at 1.718 million won.

This market turbulence is partly attributed to the amplified movements of leveraged exchange-traded funds (ETFs) tracking major semiconductor stocks. These products, designed to magnify market gains and losses, experienced sharp declines during the preceding downturn and saw gains exceeding 50% on this rebound day. The broader market sentiment was also influenced by positive overnight performance in the U.S. stock market, particularly a strong earnings report from Microsoft and a significant rise in the Philadelphia Semiconductor Index.

The secondary KOSDAQ market also witnessed a substantial rally, closing up 11.63%. Many semiconductor-related companies, including component and equipment suppliers, experienced near-limit up movements. This day's trading saw the activation of 'buy-side circuit breakers' on both the KOSPI and KOSDAQ markets, signaling extreme price movements and temporarily halting trading to prevent further panic or irrational exuberance.