KOSPI rises 1.2% past 6,080 as chip stocks extend rally

Key takeaways

• South Korea's benchmark index gained 1.24%, reaching 6,087.2, at 09:30 Seoul time (00:30 UTC) on Thursday, Oct 29, extending Wednesday's 6.63% surge, according to Yahoo Finance data.
• Chip heavyweights led again: SK hynix traded up between 3% and 4% in early dealing, while Samsung Electronics edged higher ahead of its confirmed third-quarter results.
• Foreign investors were net buyers of about 186 billion to 201 billion won in the first minutes of trade, while local institutions sold, Hankyung and Blockmedia reported.
• No single news item has been confirmed as the trigger for the jump between 09:10 and 09:30 Seoul time.

What happened to the KOSPI on Oct 29

The KOSPI rose 1.24% to 6,087.2 by 00:30 UTC on Oct 29, per Yahoo Finance data, a 1.09% gain in thirty minutes as foreign buyers returned to SK hynix and other chip stocks a day after the index reclaimed 6,000.

The session did not start that way. The KOSPI opened at 6,017.22, just 0.08% above Wednesday's close of 6,012.44, and briefly dipped below 6,000 to a low of 5,987.55 as investors took profits after the previous day's rally, Bloomingbit reported. It turned positive within minutes. By 09:31 Seoul time (00:31 UTC), Yahoo Finance showed the index at 6,077.49, up 1.08%, with an intraday high of 6,099.57.

The move builds on Wednesday's 6.63% jump after SK hynix posted record third-quarter profit and a shareholder return plan of about 100 trillion won.

What drove the move

SK hynix and the chip trade

Semiconductor large caps did most of the lifting. At 09:10 Seoul time SK hynix was up 3.16% at 1,534,000 won and its holding company SK Square was up 3.37%, according to Hankyung. Blockmedia put SK hynix 3.90% higher at 1,545,000 won at 09:07. Both outlets tied the gains to SK hynix's record earnings, long-term supply deals and roughly 100 trillion won shareholder return plan announced on Wednesday.

Han Ji-young of Kiwoom Securities said SK hynix's long-term contracts with major customers, which she said leave its HBM and DRAM volumes effectively sold out through 2029, ease worries about how visible chip earnings will be in the medium to long term, Blockmedia reported. Overnight, memory names such as Micron and Sandisk had also rallied in New York after the SK hynix results, the outlet added.

Foreign buying

Foreign investors bought on a net basis from the open. Bloomingbit counted 168.2 billion won of net foreign buying by 09:04, Blockmedia 200.8 billion won by 09:07 and Hankyung 186.1 billion won by 09:10. Institutions were net sellers in all three snapshots, which points to profit-taking by local funds after Wednesday's surge.

Fed decision overnight

The Federal Reserve held its policy rate at its October meeting. Chair Kevin Warsh said further moves would depend on incoming data, which Mirae Asset Securities' Seo Sang-young said the market read as more dovish than expected, according to Hankyung. Blockmedia judged the impact on Seoul as limited. For background on the hike debate, see our Fed October meeting explainer. The won also firmed to about 1,339 per dollar in early trade, both outlets reported.

What we know and what we don't know yet

• Known: the gain is concentrated in chip stocks and backed by net foreign buying, while breadth was weak early on. At 09:04 decliners outnumbered advancers 540 to 249, according to Bloomingbit.
• Known: not every large cap rose. LG Energy Solution fell 7.57% to 360,000 won by 09:10 on reports that parent LG Chem plans to sell about 2.5 trillion won of its stake, Hankyung reported, and Hyundai Motor slipped 1.86%.
• Not confirmed: the cause of the acceleration between 09:10 and 09:30 Seoul time. No exchange notice, policy statement or company filing has been identified as the trigger, and it has not been confirmed whether positioning before Samsung's results played a role.

Background: Samsung's results day

Samsung Electronics is scheduled to release confirmed third-quarter results and hold its earnings call on Thursday morning, Newsis reported via Financial News. In its Oct 8 preliminary figures, the company estimated revenue of about 195 trillion won and operating profit of about 107.4 trillion won, its first quarter above 100 trillion won, according to Newsis and SamMobile.

Investors are watching for the HBM supply outlook, progress on long-term supply agreements and the board's decision on a planned cash dividend of about 30 trillion won, which includes the regular third-quarter payout, Newsis reported. Samsung shares were up 0.41% at 243,000 won at 09:10, according to Hankyung. The chip-driven swings in Seoul this month have run both ways. The index fell 3% on Oct 23 on a chip selloff before jumping 3% on Oct 27.

What it means

Thursday's early gain shows that buyers stayed with the semiconductor trade after Wednesday's sharp move, and foreign money again led the way. The market remains narrow, though: most stocks fell in the first minutes, and the index depends heavily on two chipmakers. The next test is Samsung's confirmed results and its shareholder return decision. Analysts quoted by local media framed both as checks on whether confidence in chip earnings can hold. After daily swings of 3% to more than 6% in the past week, further volatility around the release would not be unusual.

This article is for information only and is not investment advice.