South Korea's benchmark Kospi index soared over 16% on Friday, July 31, reaching 6,490.53 points and marking its largest daily gain in history. This unprecedented surge followed a three-day rout that had seen the index tumble nearly 17%. The previous record for a single-day increase was 11.95% during the 2008 global financial crisis. The Kospi's rally was fueled by a rebound in U.S. technology stocks and optimistic earnings reports from companies like Microsoft, Amazon, and Meta, which reinforced confidence in AI infrastructure spending.
Semiconductor stocks led the charge, with foreign investors being the main drivers of the rally. Samsung Electronics surged 24.40% to 257,500 won, and SK Hynix jumped 28.44% to 1,699,000 won. Other notable increases included SK Square and Samsung Electro-Mechanics hitting their daily 30% upper limits, Hyundai Motor rising 9.40%, Samsung Life Insurance up 16.86%, and Samsung C&T Corporation gaining 20.75%. Foreign investors recorded net purchases exceeding $5 trillion on the Kospi by mid-morning, while individual investors net sold a similar amount.
The rebound was also supported by news of SK Group Chairman Chey Tae-won's purchase of SK Hynix shares, bolstering confidence in the memory chipmaker. Additionally, South Korean regulators announced measures to curb the recent sell-off and address market volatility. These included new regulations on single-stock leveraged exchange-traded funds (ETFs), which had been criticized for exacerbating market downturns. The government also pledged to invest nearly $14 billion into its sovereign wealth fund for AI investments and data centers.
Despite the significant rebound, Jung In Yun of Fibonacci Asset Management cautioned that while Friday's rally could be a "one-day relief rally or it could be something that lasts a little bit longer," investors should not assume that risks surrounding the AI boom have disappeared. The KOSPI had already more than doubled in value this year and, despite significant corrections, remained 50% higher than at the end of 2025. The market had experienced extreme volatility, with multiple circuit breakers triggered this year.
