KOSPI enters a bull phase: semiconductor sector rally lifts the index by more than 20%
South Korea's KOSPI index has confidently returned to bull market territory, posting a gain of more than 20% from July lows. The key driver of this momentum has been a powerful recovery in memory chipmaker stocks, which has set the tone for the entire Asian region.
At the center of attention was Sandisk (SNDK), whose shares surged 13.7% on Thursday following the release of an ambitious long-term forecast. This spike immediately triggered a wave of buying across the sector, which continued during Asian trading on Friday.
Sandisk's Strategy: A New Benchmark for the Market
Sandisk shares closed at $1528.11 after management presented a revenue growth strategy through 2030. The company expects a compound annual growth rate in the "mid-to-high teens" percentage range while maintaining an adjusted gross margin at an impressive level of around 80%.
Chief Financial Officer Luis Visoso outlined a clear plan for returning capital to shareholders, emphasizing that all excess cash flow after growth investments would be directed to investors. The news resonated strongly: Evercore ISI analysts highlighted new long-term agreements totaling $93.9 billion, including contracts with three clients operating large data centers in the U.S., which formed the basis for a "buy" recommendation.
The Domino Effect: Chipmakers Pull Markets Along
Optimism quickly spread to other players. Micron (MU) shares rose 4.2%, while SK Hynix (SKHY) shares jumped 7.3%. Hard drive manufacturers Seagate (STX) and Western Digital (WDC) also posted gains of 4.9% and 7.3%, respectively.
On Friday, the rally continued in Asia: Japan's Nikkei 225 added 1.73%, the Topix rose 0.92%, and the KOSPI climbed 2.11%. The small-cap KOSDAQ index, which had previously shown resilience even during the downturn, gained 0.84%. Notably, the KOSPI broke through the psychological level of 7000 points for the first time in 15 trading sessions.
Bull Market Resilience: The Skeptics' View
However, not all market participants are ready to call the current rally the start of a long-term reversal. Peter Kim of KB Securities attributes the previous decline more to technical factors and capital flows rather than deteriorating fundamentals among semiconductor manufacturers. In his assessment, forced liquidation of credit positions is already subsiding.
Jeong In Yun of Fibonacci Asset Management Global takes a more cautious stance, noting: "I wouldn't call this a fully new bull market." The index gained more than 10% over five trading days ahead of the long weekend in South Korea, and foreign capital inflows could hold the 7000 level. The key factor will be how long the optimism surrounding Sandisk's forecast can support the rest of the memory sector.
My analysis: The current dynamics reflect a classic recovery cycle in the semiconductor industry, but investors should keep in mind the high volatility. Sandisk's forecast looks ambitious, and if the company fails to deliver on it, the market could correct quickly. For now, the fundamental drivers — growing demand for AI and data center chips — remain intact, providing a solid foundation for further movement.