KOSPI returns to "bull" territory: semiconductor sector rally adds 20% to the index
South Korea's KOSPI stock index has confidently recovered, gaining more than 20% from July lows and re-entering a bull market phase. The key driver of this turnaround has been a powerful resurgence in the memory chip manufacturing sector, which has set the tone for the entire Asian market.
Sandisk's Optimism Inspires the Market
The catalyst for the rally was the actions of American company Sandisk (SNDK). On Thursday, the company's shares surged 13.7% after top management presented an ambitious long-term growth strategy through 2030. The company forecasts a sustainable double-digit compound annual growth rate in revenue and the maintenance of adjusted gross margin at around 80%. CFO Luis Visoso confirmed the intention to return all excess cash flow to shareholders after investments in growth, which was perceived as a signal of confidence in future cash flows.
Evercore ISI analysts, particularly Amit Daryanani, noted Sandisk's impressive portfolio of long-term agreements totaling $93.9 billion, including three clients with large-scale data centers in the United States. It is this contract base that formed the foundation for the "buy" recommendation. This optimism was instantly transmitted across the entire sector.
A Wave of Growth Swept Across Asia and the US
On Thursday, Micron (MU) shares rose 4.2%, while South Korea's SK Hynix (SKHY) gained 7.3%. Hard drive manufacturers Seagate (STX) and Western Digital (WDC) also posted gains of 4.9% and 7.3%, respectively. On Friday, Asian markets picked up the baton: Japan's Nikkei 225 rose 1.73%, the Topix gained 0.92%, and the KOSPI strengthened by 2.11%, breaking through the 7000-point mark for the first time in 15 trading sessions. The small-cap index KOSDAQ, which had previously shown resilience even in a falling market, also rose 0.84%.
Sustainability of the Bullish Trend in Question
Despite the impressive momentum, not all market participants are ready to declare the start of a long-term uptrend. Peter Kim from KB Securities attributes the previous decline more to technical factors and capital rotation rather than a deterioration in the fundamental indicators of semiconductor manufacturers. In his assessment, the wave of forced liquidation of credit positions is already subsiding.
At the same time, Jung In Yun from Fibonacci Asset Management Global urges caution, emphasizing that the current growth should not be fully labeled a new "bull" market. The index has gained more than 10% over five trading days ahead of the extended holiday weekend in South Korea, and an inflow of foreign capital could hold the 7000 level. However, further dynamics will depend on how long the optimism generated by Sandisk's forecasts can sustain the rest of the memory sector companies.
My view: The market is clearly overheated in the short term after such a rapid surge. Although the fundamental story for the semiconductor sector, backed by the AI boom and memory supply contracts, remains strong, a correction should not be ruled out. It would be prudent for investors to wait for consolidation around the 7000 level before increasing positions, rather than chasing a move that has already happened.