South Korea's Kospi swings from bear to bull market in just over a month on AI trade

South Korea's benchmark Kospi index entered a technical bull market on August 13, 2026, rebounding 23% to 31% from its July low. The rally was driven by a sharp recovery in heavyweight chipmakers Samsung Electronics and SK Hynix, which surged up to 8% amid renewed optimism over global AI spending. Despite recent volatility amplified by leveraged ETFs and foreign selling, analysts at Nomura and Citi remain structurally positive, maintaining long-term Kospi targets of up to 11,000.

Kospi bull market recovery

• ▪South Korea's benchmark Kospi index entered a technical bull market on August 13, 2026, rebounding approximately 23% to 31% from its July 2026 low.
• ▪The Kospi index had previously entered bear-market territory after plunging more than 20% from its peak of 9,386.
• ▪The Kospi index surged nearly 5% on the morning of August 13, 2026, reaching 6,896, which was its highest level in nearly three weeks.

Samsung Electronics rally

• ▪Samsung Electronics shares rose over 4% on August 13, 2026, leading the Kospi index's recovery alongside other major technology hardware stocks.
• ▪Samsung Electronics and SK Hynix together account for nearly half of the Kospi index's weight and have contributed roughly two-thirds of its gains in 2026.

SK Hynix rally

• ▪Sentiment around South Korean semiconductor stocks was buoyed by reports that Singapore state investor Temasek plans to invest in memory chipmakers.
• ▪SK Hynix shares surged between 7% and 8% on August 13, 2026, extending a sharp rebound from the technology-driven sell-off in July 2026.

AI spending revival

• ▪Memory chip shares began outperforming the broader technology sector for the first time since June 2026, signaling a rotation back into technology hardware.
• ▪The recovery in South Korean chipmakers was driven by renewed optimism over global artificial-intelligence spending, supported by strong earnings from U.S. firms Supermicro and CoreWeave.

Leveraged ETF volatility risks

• ▪Single-stock leveraged ETFs linked to Samsung Electronics and SK Hynix increased concentration risks and amplified the Kospi's downward spiral during the July 2026 sell-off.
• ▪Nomura stated that the heavy correction in South Korea's equity market was driven by foreign selling, slowing institutional support, and volatility from leveraged ETFs.

Analyst price targets

• ▪Citi downgraded South Korea's stock market to a neutral stance due to volatility in AI-linked chip stocks but maintained its 10,000 target for the Kospi.
• ▪Nomura projected that corporate share buybacks and treasury-share cancellations could support the Kospi's re-rating toward a target of 10,000 to 11,000.