KOSPI has entered a bull market: chip rally added 20% to the index
South Korea's KOSPI stock index has firmly established itself in a bull market phase, demonstrating an impressive gain of more than 20% from July lows. The main driver of this upward movement has been the powerful recovery in memory chip maker stocks, which set the tone for the entire Asian region.
The key catalyst was Sandisk (SNDK), whose shares surged 13.7% on Thursday following the release of an optimistic long-term forecast. This momentum instantly spread to Asian markets, where a confident rally continued on Friday.
Sandisk's strategy inspires investors
Sandisk shares closed at $1528.11 after top management presented an ambitious revenue growth strategy through 2030. The company expects a sustainable double-digit compound annual growth rate in revenue and the maintenance of adjusted gross margin at around 80%. CFO Luis Visoso also announced a shareholder payout program, emphasizing that all excess cash flow after development investments would be returned to investors.
Evercore ISI analysts highlighted Sandisk's impressive portfolio of long-term contracts totaling $93.9 billion, including three major agreements with operators of large-scale data centers in the United States. This contract base became the foundation for a "buy" recommendation.
A wave of growth swept across the sector
The rally quickly spread to related companies. Micron (MU) shares rose 4.2%, while SK Hynix (SKHY) gained 7.3%. Hard drive manufacturers Seagate (STX) and Western Digital (WDC) also showed solid gains of 4.9% and 7.3%, respectively.
On Friday, positive momentum continued across Asian markets: Japan's Nikkei 225 rose 1.73%, Topix added 0.92%, and the KOSPI climbed 2.11%. The small-cap KOSDAQ index, which showed resilience even during the downturn, also rose 0.84%. Notably, the KOSPI broke through the psychologically important 7000-point level for the first time in 15 trading sessions.
The sustainability of the bull trend is in question
However, not all market participants share the optimism. Peter Kim of KB Securities attributes the previous decline more to technical factors and capital flows rather than fundamental concerns about semiconductor makers' profitability. In his assessment, the wave of forced liquidation of credit positions is already subsiding.
Jeong In-yun of Fibonacci Asset Management Global urges caution, noting that it would be premature to call the current rally a full-fledged new bull market. Over the five trading days before the long weekend in South Korea, the index gained more than 10%, and foreign capital inflows could support the 7000 level. However, further momentum will depend on how long the optimism surrounding Sandisk's forecast can sustain the rest of the memory sector.
My view: The market is clearly overheated in the short term, and the current rally is largely speculative in nature. However, fundamental demand for memory chips, backed by $93.9 billion in contracts, points to a structural shift that could provide the sector with sustainable support in the medium term. Investors should watch for pullbacks to enter positions.