KOSPI is back in bull territory: chip rally pushes index up 20%
The South Korean stock index KOSPI has confidently returned to a bull market phase, demonstrating an impressive rise of more than 20% from July lows. The main driver of this movement was the powerful recovery of memory manufacturer stocks, which set the tone for the entire regional market.
The key catalyst was optimism surrounding Sandisk (SNDK). On Thursday, the company's shares soared 13.7% after management presented an ambitious long-term strategy. Top executives promised investors mid- to high-double-digit revenue growth rates through 2030, maintaining an adjusted gross margin of around 80%. CFO Luis Visoso reaffirmed a commitment to returning excess cash flow to shareholders, which was perceived by the market as a signal of confidence in the sustainability of the business model. This news triggered a domino effect: Micron (MU) shares rose 4.2%, SK Hynix (SKHY) gained 7.3%, while Seagate (STX) and Western Digital (WDC) added 4.9% and 7.3%, respectively.
On Friday, the rally continued across Asian markets. Japan's Nikkei 225 rose 1.73%, the Topix gained 0.92%, and the KOSPI added 2.11%, breaking through the psychological level of 7000 points for the first time in 15 trading sessions. The small-cap index KOSDAQ, which had previously shown resilience even during the downturn, also edged up 0.84%.
Resilience or a temporary rebound?
Not all market participants are ready to call the current rise the start of a long-term trend. Peter Kim from KB Securities believes the previous decline was driven by technical factors and capital flows, rather than a deterioration in the fundamentals of semiconductor manufacturers. In his assessment, the wave of forced liquidation of credit positions is already subsiding, which lays the groundwork for further growth.
However, Jeong In Yun from Fibonacci Asset Management Global urges caution, noting that it is premature to talk about a full-fledged new bull market. The influx of foreign capital, which is keeping the index at 7000, could weaken as soon as the euphoria around Sandisk's forecasts begins to fade.
My view: The current rally is a classic example of a recovery after oversold conditions, supported by strong corporate signals. However, the sustainability of this movement will depend on the memory sector's ability to back up forecasts with real orders in the coming quarters. For now, fundamental demand for chips remains high, but volatility at these levels is inevitable.