Korean Stocks Surge 22% in 10 Days, Chip Stocks Lead Rally Nearing Technical Bull Market
Nashnova编辑部
Korea's Kospi has rebounded over 22% from its July 30 low, led by Samsung Electronics and SK Hynix — but the rally follows a 22% single-month crash in July, and whether it lasts hinges on one question: is the leverage truly flushed out?
What just happened — 22% in 10 trading days?
The Kospi rose as much as 4% on Thursday, lifting its cumulative gain from the July 30 low past 22% — clearing the technical bull-market threshold (a 20% rise from a trough) and pushing year-to-date returns above 60%.
Samsung Electronics and SK Hynix both gained over 4% on the day, driving the bulk of the move.
This means → the two memory-chip giants dominate the Kospi's weighting. When they rally, the index rallies — this rebound is, at its core, a chip-stock story.
Why are chip stocks surging now?
The latest earnings from global big-tech firms show AI capital spending remains massive, directly boosting confidence in demand for tech hardware.
AI-related trading sentiment is recovering fast, with capital flowing back into chip names that were sold off weeks earlier.
In plain terms = Microsoft, Google, and peers are still buying AI chips aggressively. The buyers haven't left — so the companies selling those chips see their share prices follow.
Wait — didn't this market just crash in July?
The Kospi fell 22% in July alone — its worst single month since the global financial crisis.
The trigger: forced liquidation of leveraged chip-stock positions, which tripped circuit breakers and wiped out significant retail wealth.
This reflects a market that had built up extreme leverage. Once prices dropped, margin calls cascaded — the deeper the crash, the tighter the spring was coiled for a snapback.
Why can a market bounce so hard right after a crash?
Maxence Visseau, CIO of Dubai-based Arkevium Capital, explained: "Once leverage is cleared, the same market can stage a violent rebound. Forced sellers are gone, shorts take profits, market-makers cut downside hedges."
In plain terms = the people forced to sell in July have already sold. The short-sellers who profited have cashed out. Selling pressure vanished overnight — and the moment buyers stepped in, prices snapped up.
South Korea's government recently imposed restrictions on single-stock leveraged ETFs, and investors have been voluntarily reducing margin balances — both factors are stabilizing the market.
Can this rally last?
The core question is simple: has the deleveraging fully run its course?
If leveraged positions have been largely cleared, the rally has a fundamental tailwind (AI demand) and may continue.
If hidden leverage remains, the next bout of volatility could replay July's script — This means → the risk of chasing this rally hasn't disappeared; it is merely masked by optimism for now.
Content is for reference only, not financial advice.