KOSPI Index approaches the 7,000-point mark driven by foreign and institutional buying… Semiconductors and AI sectors lead the gains

South Korea’s Composite Stock Price Index (KOSPI) surged more than 5% on the 4th, driven by large-scale synchronized buying by foreign investors and institutions, closing at 6,936.99 points—its first time ever breaking above 6,900 points—and getting within touching distance of the 7,000-point mark. Analysts say this was because, during Korea’s holiday closure for Labor Day, U.S. stock technology shares continued to strengthen and tensions around the Middle East situation eased, leading investor confidence to rebound immediately.

According to the Korea Exchange, the KOSPI index rose 338.12 points (5.12%) from the previous trading day to close at 6,936.99 points. The index opened at 6,782.93 points, up 2.79%, and after a brief consolidation in the morning, it expanded its gains throughout the day. It was only 63.01 points away from 7,000. In terms of supply and demand, foreign investors and institutions led the market. In the securities market, foreign investors posted net purchases of 3.0184 quadrillion won, while institutions posted net purchases of 1.9353 quadrillion won. Foreign investors’ net buying in KOSPI was the second-highest level in history. By contrast, individual investors sold a net 4.7904 quadrillion won, taking profits centered on the sharply rising stocks.

The core of this rally was artificial intelligence-related stocks, including semiconductors. Foreign investors made net purchases of 3.9783 quadrillion won in the electrical and electronics industry within the KOSPI alone, effectively concentrating funds into leading semiconductor blue-chip stocks. As a result, Samsung Electronics rose 5.44% to close at 232.5k won; SK Hynix rose 12.52% to close at 1.447M won. SK Hynix greatly surpassed the previous record high of 132.8M won set on April 28, setting a new record, and Samsung Electronics also renewed its intraday high for the year again. The Korea Securities Dealers Automated Quotations (KOSDAQ) index also rose 21.39 points (1.79%), closing at 1,213.74 points, adding momentum to the broad rebound in growth stocks, including those in secondary batteries and biotech.

Looking at the background, the earnings releases from major U.S. technology companies in the latter part of last week were a decisive factor. Alphabet, Google’s parent company, the metaverse platform, Amazon, Microsoft, and others all released earnings that exceeded market expectations, driving strong gains in AI infrastructure and semiconductor-related stocks across global stock markets—a trend that was reflected after the Korean market opened. In fact, the U.S. S&P 500 Index and Nasdaq Composite Index rose for two consecutive trading days, and the Philadelphia Semiconductor Index also maintained an upward trend over the same period. In the view of securities industry participants, the momentum from earnings growth and the appeal of low valuations are both drawing attention. Daishin Securities noted that even with the KOSPI hitting a record high, as of April 30 its 12-month forward price-to-earnings ratio (the stock price level corresponding to expected profits over the coming year) still stood at 7.12 times, remaining in a still-undervalued range.

Thanks to the day’s surge, the total market capitalization of South Korea’s top ten listed conglomerate companies, based on closing prices, reached 4,077.2 trillion won—breaking above 4,000 trillion won for the first time in history. Samsung Group’s listed companies had a total market capitalization of 1,771.5 trillion won, while SK Group’s was 1,277 trillion won; just these two groups together were close to 3,000 trillion won. On the other hand, the Middle East situation—an external variable for markets—also had a certain positive effect on investor confidence. This is because U.S. President Donald Trump is considering diplomatic and policy responses to the situation involving Iran and mentioned a so-called “liberation plan” to rescue third-country ships trapped in the Strait of Hormuz, which eased concerns about a full-scale conflict to some extent. However, since international oil prices remain high and the U.S.’s subsequent measures are uncertain, this sense of reassurance is limited. It is expected that this trend going forward may continue depending on whether U.S. technology stock earnings, foreign investors’ supply and demand, and whether Middle East risks ease. Whether the KOSPI can attempt to break through the 7,000-point level ultimately also depends on whether the upward momentum in the semiconductor and AI-related industries can be sustained.