South Korean stocks rallied on August 5, with the KOSPI index closing 3.76% higher at 6598.26 and the KOSDAQ gaining 2.42% to 799.59, as foreign investors returned with net purchases of 1.4278 trillion won. The surge was driven by strength in US semiconductor stocks the previous session, reviving AI investment sentiment and triggering a buy-side circuit breaker at 9:25 AM - the 22nd such event this year. The rally marked a recovery from recent volatility, with the KOSPI recouping losses from earlier in the week as all 10 major sectors posted gains.
Foreign Investors Net Buy 1.4 Trillion Won on KOSPI
Foreign investors led the KOSPI's advance with net purchases totaling 1.4278 trillion won as of 3:40 PM, according to Korea Exchange data. Individual investors net sold 1.1662 trillion won and institutions sold 275.2 billion won, but foreign buying overwhelmed domestic selling pressure. The KOSPI rose 239.31 points from the previous session, with the buy-side program trading halt activated at 9:25 AM - marking the 22nd buy-direction circuit breaker and 45th total circuit breaker event of the year.
Samsung Electronics and SK Hynix Lead Semiconductor Gains
All 10 major market capitalization sectors closed higher. Samsung Electronics rose 6,000 won (2.5%) to 246,000 won, while SK Hynix surged 91,000 won (5.77%) to 1.668 million won. Samsung Electro-Mechanics jumped over 14%, Samsung C&T gained over 7%, and SK Square and Samsung Life Insurance rose over 5%. Hyundai Motor advanced over 3% and KB Financial Group climbed over 1%. Lee Kyung-min, researcher at Daesin Securities, stated that "the previous day's strong performance in the US semiconductor sector confirmed continued AI investment and profitability creation by hyperscalers, with expectations further boosted by news that major memory manufacturers completed sales of DRAM and HBM volumes through 2027."
KOSDAQ Extends Rally to Four Consecutive Sessions
The KOSDAQ index closed at 799.59, up 18.87 points (2.42%), approaching the 800-point threshold in its fourth consecutive day of gains. After retreating to the 640 range on July 30, the index has risen steadily: 11.63% on July 31, 2.44% on August 3, 5.88% on August 4, and 2.42% on August 5. The rally occurred as non-semiconductor stocks experienced rotation alongside a surge in US semiconductor stocks, bringing broad-based gains across sectors.
Analysts Cite US Semiconductor Strength and AI Optimism
Kang Jin-hyuk, researcher at Shinhan Investment Securities, noted that "strong AI optimism flowed in alongside stabilizing oil prices and interest rates, triggering a buy-side circuit breaker on the KOSPI, while the KOSDAQ continued its strength centered on biotech catalysts after three consecutive days of circuit breakers." He added that "credit balances have decreased 27% from their June peak, showing signs of stabilizing volatility." Lee Kyung-min of Daesin Securities observed that "semiconductor, IT hardware, and power equipment sectors showed particularly strong performance, while the construction sector rose as its undervaluation relative to earnings became more prominent."
FAQ
What caused Korean stocks to rally on August 5?
The KOSPI rose 3.76% to 6598.26 on August 5, driven by foreign investor net purchases of 1.4278 trillion won and strength in US semiconductor stocks the previous session, which revived AI investment sentiment.
How did major Korean semiconductor stocks perform on August 5?
Samsung Electronics closed at 246,000 won, up 2.5%, while SK Hynix surged 5.77% to 1.668 million won. Samsung Electro-Mechanics jumped over 14%, leading semiconductor sector gains across the market.
