AI Storage Recovery Drives South Korean Stock Market Rebound

The South Korean stock market quickly rebounded after a sharp decline at the end of July, with the Kospi index recovering over 20% from its closing low on July 30, re-entering the technical bull market zone. The core driving force behind this recovery comes from the rebound of AI storage chip-related stocks.

Sandisk Boosts Storage Stocks

The latest catalyst for market sentiment comes from Sandisk. Reports indicate that the company has provided a relatively optimistic business outlook, expecting its adjusted gross margin to remain close to 80%. This statement has significantly boosted market confidence in an industry that is typically volatile.

The optimistic sentiment quickly spread to peers. Micron rose by 4.2%, Western Digital increased by 7.3%, and SK Hynix also saw a noticeable rise. Sandisk has also signed multi-year supply agreements with eight customers, attempting to reduce its dependence on traditional storage cycle fluctuations.

Samsung and SK Hynix Lead the Rebound

The rebound in the South Korean market is primarily driven by Samsung Electronics and SK Hynix. These two companies were major contributors to the sharp decline in July but have now become the main beneficiaries of the capital flow back into AI storage trades.

In Thursday's trading, Samsung Electronics rose by about 5%, while SK Hynix increased by approximately 6%, pushing the Kospi index higher. By Friday, the Kospi rose another 2.1%, regaining the 7000-point mark after about 15 trading days.

Looking back at the previous decline, the market experienced significant volatility. On July 28, the Kospi fell by 10.8% in a single day, with Samsung Electronics and SK Hynix dropping by 13.6% and 14.4%, respectively. The following day, the market continued to plunge sharply, triggering a temporary trading halt at one point.

7000 Points as the Next Key Level

Although it has technically returned to the bull market zone, the sustainability of this rally is still under observation. The Kospi is currently still below the high reached in June, and the index's high dependence on Samsung Electronics and SK Hynix means that both upward and downward movements could be amplified.

Reuters previously mentioned that during this year's significant market fluctuations, these two chip companies collectively accounted for about half of the benchmark index's weight. This means that as long as AI storage trades continue to heat up, the index may still benefit; however, if the leading stocks weaken again, the pressure for a pullback could become evident more quickly.

Currently, the improvement in AI storage demand, the repair of investor positions, and Sandisk's positive outlook are providing reasons for capital to flow back. For the market, the 7000-point mark will become the next important observation point.