KOSPI returns to bull territory: semiconductor renaissance accelerates the South Korean market
South Korea's KOSPI index has confidently recovered, gaining more than 20% from July lows and officially entering a bull market phase. The main driver of this turnaround has been a powerful resurgence in the memory chip manufacturing sector, which set the tone for the entire Asian trading session.
Sandisk sets the trend
The key catalyst for the rally was Sandisk (SNDK) shares, which soared 13.7% on Thursday following the release of the company's long-term optimistic forecast. Top management presented a strategy through 2030, projecting sustained double-digit revenue growth and maintaining an adjusted gross margin of around 80%. CFO Luis Visoso also announced a capital return program to shareholders, emphasizing that all excess cash flow after investments would be directed to investors.
This optimism immediately spilled over to related companies. Micron (MU) shares jumped 4.2%, while SK Hynix (SKHY) shares rose 7.3%. Hard drive manufacturers Seagate (STX) and Western Digital (WDC) also saw gains of 4.9% and 7.3%, respectively.
Asian momentum
On Friday, the rally continued across Asian markets. Japan's Nikkei 225 gained 1.73%, the Topix rose 0.92%, and the KOSPI climbed 2.11%, breaking through the psychological 7000-point level for the first time in 15 trading sessions. The KOSDAQ small-cap index, which had shown resilience even during the recent downturn, also closed the day up 0.84%.
Assessing sustainability
However, not all market participants share the euphoria. Peter Kim from KB Securities believes the previous decline was primarily technical in nature, related to capital flows rather than a deterioration in the fundamental indicators of semiconductor manufacturers. In his assessment, forced liquidation of credit positions is already subsiding.
At the same time, Jung In Yun from Fibonacci Asset Management Global urges caution, refusing to call the current momentum a full-fledged new bull market. Indeed, the index gained more than 10% in just five trading days ahead of the long weekend in South Korea, which may point to the speculative nature of the move.
My view: The KOSPI's 20% rise from its lows is an impressive technical signal, but fundamental sustainability will be tested in the coming weeks. The key question is whether the optimism around Sandisk and the entire memory sector can offset a potential slowdown in global demand. Foreign capital inflows could hold the index at the 7000 level, but confirming a long-term reversal will require consolidation above this mark without significant pullbacks. Investors should closely monitor the quarterly reports from SK Hynix and Samsung — they will serve as the litmus test for the entire sector.