Kospi Rebounds 3.9% as Buy-Side Circuit Breaker Triggers, Won Stabilizes on Direct Intervention

As of noon, the Kospi index was up roughly 3.9% from the previous close, recovering to around the 7,780 level. On the flow side, foreigners were net sellers of about 700 billion won, institutions net buyers of 270 billion won, and retail investors net buyers of nearly 400 billion won. Foreign selling pressure, which had been intense, showed signs of easing. The Kosdaq gained nearly 6%, passing the 965-point mark.

Both the Kospi and Kosdaq triggered buy-side circuit breakers (sidecars) that day. This marked the 12th sidecar trigger for the Kospi and the 9th for the Kosdaq this year, underscoring the elevated volatility gripping the market. The hosts noted concern that frequent sidecar triggers could desensitize investors to volatility, comparing it to how a siren blaring every day eventually stops signaling danger.

Given the previous day's 8.8% plunge, the size of this rebound was seen as a key indicator of the market's resilience. That decline was driven by combined US rate-hike concerns and geopolitical noise from Iran, which also dragged down Asian markets — Japan fell about 4% and Taiwan roughly 3.9% — while Korea's drop was about double that, suggesting domestic factors amplified the selloff. Conventionally, after entering an oversold zone, the following day's rebound needs to recover at least half of the prior decline to signal continued market strength; the roughly 3.99% rebound met that threshold.

Gains extended further into the afternoon. By the time the discussion continued, the Kospi's advance had widened to about 5.3%, reaching 7,881 points. Foreigners continued selling, at around 920 billion won, but institutions countered with 1.51 trillion won in buying, notably with the National Pension Service posting net purchases for a second straight day. The number of advancing stocks topped 780.

Among large-cap stocks, Samsung Electronics rose about 5% and SK Hynix jumped as much as 11%, breaking above the 2.1 million won level. Samsung Electro-Mechanics gained about 10%, surpassing 1.85 million won. Semiconductor equipment stocks were especially strong, dominating Kosdaq trading value, with HPSP ranking first, TechWing second, and optical-networking related Daehan Optical third. Attention was also spreading to front-end process stocks (deposition, bonding, annealing) alongside back-end (testing, cleaning, packaging) names amid expanding HBM production.

Korean chip stocks tracked overnight gains in Micron Technology, which surged about 10% in New York trading. Optical networking stocks also rallied after Corning's order news spread from the US market; Kwangjeon Electronics touched the upper limit intraday before settling around a 26% gain. Nvidia CEO Jensen Huang's remarks at Taiwan's Computex 2026 about connection speed limitations between GPUs — pointing to a need for optical solutions — were cited as underlying the sector's strength. Sungho Electronics, whose share price has reportedly risen 60- to 70-fold over the past year, was highlighted as a leading name in the optical theme, alongside Samsung Electro-Mechanics' 11% gain.

The Kosdaq outperformed the Kospi, led by Alteogen. News that its ALT-B4 substance received patent registration from the European Patent Office sent shares up about 13%, retaking the top spot in Kosdaq market cap. ALT-B4 is the core substance behind Alteogen's platform technology that converts intravenous injections to subcutaneous ones; the company had already reached the top Kosdaq spot on the strength of exclusive US recognition. The European patent registration raised expectations for technology licensing deals in the European market.

The Alteogen-driven rally spread across the broader biotech sector. Kolon TissueGene jumped 11% with no specific news of its own, ABL Bio rose as much as 12% intraday before settling near 6%, and LegoChem Biosciences gained about 11%. News of a related patent invalidation involving Hanall Biopharma also contributed to improved sentiment across biotech. Separately, tied to Jensen Huang's Korea visit, stocks diverged based on whether Nvidia was buying from or selling to them — memory-related names it visited to purchase from rose, while companies it visited to sell products to (LG, Hyundai Motor, Doosan, Naver) saw relatively weaker performance. For Naver specifically, Kiwoom Securities downgraded its investment rating, questioning the mid-to-near-term sustainability of AI-related revenue.

The key issue driving recent volatility in memory chip stocks was a socket controversy originating from SemiAnalysis. The outlet analyzed the server rack for Nvidia's new Vera Rubin AI accelerator unveiled at Taiwan's Computex 2026 and suggested socket memory capacity would come in at roughly half of prior expectations, triggering a sharp selloff in Samsung Electronics and SK Hynix shares on interpretation that this signaled weakening demand.

SemiAnalysis later clarified that its analysis had been misread. The reduced socket memory did not reflect weaker demand but rather reflected memory being too expensive to pack in more, and Nvidia's capacity allocation was simply being managed across products beyond Vera Rubin alone. A follow-up explanation suggested memory makers concentrating on higher-margin HBM production was relatively constraining supply of socket-grade DRAM, pushing its price up in tandem.

Major brokerages quickly issued reports to calm the controversy. Nomura assessed the memory weakness as confirming structural supply shortage rather than signaling demand softness, characterizing Nvidia's capacity reduction — like Broadcom's — as an idiosyncratic issue. Bernstein raised its estimate for Nvidia's server rack price from a prior consensus of $8 million to $9.1 million, citing the likelihood that HBM4 prices had more than doubled from before. Based on this, it was suggested SK Hynix's HBM revenue could come in 20-30% higher in total sales given the per-gigabyte price increase.

Second-quarter earnings expectations were also cited as a factor calming memory concerns. Combined operating profit for Samsung Electronics and SK Hynix in Q2 is projected at roughly 150 trillion won, a sharp jump from the combined 94 trillion won (57 trillion for Samsung, 37 trillion for SK Hynix) in Q1. Specifically, Samsung Electronics' Q2 operating profit is estimated at about 86.3 trillion won and SK Hynix's at about 62.4 trillion won, with Bloomberg consensus figures running even higher. On this basis, panelists argued there is little fundamental reason to doubt the memory business outlook.

The panel identified the core driver of the ongoing controversy as market unease stemming from prices that have only risen without pause, fueling suspicion that a reversal must eventually come. However, they expect such controversies to naturally fade once earnings confirm revenue and profit figures with hard numbers, with the upcoming Q2 earnings season expected to put an end to the debate.

Bond issuance by major AI-related tech companies has been surging. This year's expected corporate bond issuance among AI-related firms is projected at roughly $160 billion, up nearly 60% from the previous year. Issuance is occurring across a wide range of currencies, interpreted as an effort to raise capital globally. This is seen as a sign that AI investment is being sustained not just from cash on hand but through aggressive borrowing as well.

Panelists characterized this large-scale investment as driven by animal spirits — once started, it is not easily stopped. Hyperscalers including Amazon, Meta, Microsoft, and Oracle have announced roughly $780 billion in planned investment this year, making the $160 billion in bond issuance only a fraction of that — comparable in scale to SpaceX's IPO proceeds, one comparison noted. The logic that a roughly 1-percentage-point rate move would meaningfully dent investment competition of this scale was deemed excessive.

Nvidia CEO Jensen Huang's visit to Korea served two purposes: selling GPUs and physical AI products — meeting LG, Hyundai Motor, Doosan, and Naver — and buying memory, visiting Samsung Electronics and SK Hynix. Stock performance diverged along these lines that day, with names Nvidia was buying from (memory) rising while names it was selling to underperformed by comparison.

Over the weekend, the won-dollar rate surged past 1,560, raising fears it could breach 1,600, but the tide turned after the so-called F4 — the Ministry of Economy and Finance, Bank of Korea, and Financial Supervisory Service — convened an emergency currency meeting and issued verbal intervention. The won subsequently fell to 1,518, down about 9 won from the prior regular session close, as verbal intervention took effect. Similar messaging followed in a presidential press conference, reinforcing the intervention stance.

What proved decisive was that verbal intervention was quickly followed by actual direct intervention. News that the National Pension Service had begun currency hedging drove the won down 24 won in a single day, with further declines the following day bringing it to around 1,510. Historically, National Pension Service analysis had found that not hedging currency risk produced better returns than hedging, but as criticism grew that the fund was simply buying dollars and taking them out of the market — pushing up the exchange rate with no offsetting flow — the fund had strategically revised its rules to allow hedging up to 15% of overseas assets.

When the National Pension Service enters into a forward contract with a bank, the bank hedges its own currency exposure by borrowing dollars in the market and immediately selling them. This process actually injects dollars into the market, creating downward pressure on the exchange rate — and this time, the fund's execution of hedging under the new rule was the direct trigger for the dollar supply that drove the won's decline.

Panelists credited the swiftness of the response — verbal intervention followed almost immediately by direct intervention — with much of its effectiveness. In the past, verbal intervention alone was often disregarded by the market within days, reverting to prior levels. This time, the rapid escalation to direct intervention caught the market off guard. With Korea's fundamentals — current account and trade balances — solid and dollar reserves sufficient, the response was seen as having calmed excessive anxiety over won weakness.

Park Si-dong warned against the recurring wave of crash-themed content that appears whenever stock prices fall or the exchange rate rises. Whenever the market wobbles, content and articles claiming the Korean stock market has begun to crash proliferate, but he argued these claims commit the error of projecting the current moment's volatility directly into the future without evidence. The premise that current conditions will persist indefinitely is itself flawed.

He singled out arguments citing long-term historical charts — claiming that because something similar happened in the past, it will happen again — as the most persuasive-sounding but most dangerous type of reasoning to guard against. The real risk is that investors react to such content with poor decisions; the most important thing in investing is grounding decisions in solid reasoning rather than baseless fear-driven content.

On the currency stabilization measures, he praised the swift progression from verbal intervention to actual National Pension Service hedging execution, explaining that unexpected policy combined with unexpected speed is what gives real market impact. With Korea's fundamentals sound, he stressed that the dollars have not disappeared — they simply had not been converted — and that with sufficient policy tools available to defend the currency if authorities choose to use them, excessive anxiety over the won lacks a solid basis.