KOSPI enters a bull market phase: semiconductor optimism drove the index up 20%
South Korea's KOSPI index has confidently returned to bull market territory, showing a gain of more than 20% from July lows. The key driver of this rally was the recovery of memory chipmaker stocks, which immediately reflected in investor sentiment across the Asian region.
The catalyst for the reversal came from a strong push in the U.S. market. Sandisk (SNDK) shares surged 13.7% on Thursday following the release of the company's ambitious long-term forecast. This positive momentum quickly spread to Asian markets by Friday, setting the tone for the entire trading day.
Sandisk's strategy sets the direction
Sandisk's management presented a revenue growth strategy through 2030 that impressed the market. The company is targeting a sustainable double-digit compound annual growth rate in revenue and maintaining an adjusted gross margin of around 80%. CFO Luis Visoso emphasized that all excess cash flow after development investments will be returned to shareholders.
Evercore ISI analysts, particularly Amit Daryanani, noted the existence of long-term contracts totaling $93.9 billion, including agreements with three major U.S. data center operators. This contract base became the foundation for the "buy" recommendation.
A wave of optimism also swept over other companies in the sector. Micron (MU) shares rose 4.2%, SK Hynix (SKHY) gained 7.3%, and hard drive manufacturers Seagate (STX) and Western Digital (WDC) increased by 4.9% and 7.3%, respectively.
Asian market on the rise
On Friday, the rally continued on Asian exchanges. Japan's Nikkei 225 jumped 1.73%, Topix added 0.92%, and KOSPI rose 2.11%, breaking through the 7,000-point mark for the first time in 15 trading sessions. The small-cap KOSDAQ index, which had previously shown resilience even during the downturn, also climbed 0.84%.
Sustainability of the bull trend in question
Not all market participants share the euphoria. Peter Kim from KB Securities believes the previous decline was driven by technical factors and capital reallocation, rather than fundamental problems among semiconductor manufacturers. In his view, forced liquidation of credit positions is already subsiding.
Meanwhile, Jeong In Yun from Fibonacci Asset Management Global urges caution, noting that he would not call the current rise a full-fledged new bull market. The index has gained more than 10% over five trading days ahead of the long weekend in South Korea, and foreign capital inflows could hold the 7,000 level. Further dynamics will depend on how long the optimism surrounding Sandisk's forecast can support the rest of the memory sector companies.
My expert assessment: the current rally looks fundamentally justified thanks to real contracts and structural demand for memory for AI infrastructure. However, such rapid growth over a short period always carries the risk of a correction. Investors should watch for companies' ability to confirm forecasts with actual results in the coming quarters.