South Korean shares soar after chip stock rout

South Korean equities experienced a significant surge on Friday, partially recovering from a three-day downturn that had erased hundreds of billions of dollars from the nation's stock market valuation.

The Kospi index, a key benchmark, concluded the day nearly 18% higher, propelled by the strong performance of semiconductor manufacturers SK Hynix and Samsung Electronics. This rebound followed positive earnings reports from American tech giants Amazon and Microsoft, which fueled renewed optimism regarding the substantial investments flowing into artificial intelligence (AI). Additionally, South Korean regulatory bodies unveiled initiatives designed to mitigate the week's sell-off.

The upward trend in chip stocks also contributed to gains in the Japanese and Taiwanese markets. SK Hynix, a primary supplier to prominent AI chip company Nvidia, witnessed its shares climb by almost 30%, while Samsung's stock rose by 28%. Both companies had experienced a decline in their market value earlier in the week as the sell-off in AI-related stocks intensified.

Investors had expressed apprehension about the hundreds of billions of dollars being channeled into AI by major technology firms. In recent months, stock market activity in South Korea has been notably volatile, attracting a large influx of retail investors.

The tech-heavy Kospi index in South Korea has triggered its circuit breaker mechanism, designed to curb panic selling, multiple times this year. The index had more than doubled in value this year, and despite a series of substantial drops since reaching a record high in mid-June, it remains over 50% higher than its value at the close of 2025.

Shares of AI-related companies rallied after Amazon and Microsoft surpassed their earnings forecasts. On Thursday, Amazon's stock surged by over 9% in after-hours trading in New York, while Microsoft's shares gained more than 15%.