KOSPI jumps 3% as South Korean stocks rebound from bear market rout

South Korea's KOSPI surged 3% on Wednesday, staging its biggest single-day rebound since entering a bear market earlier this month.

The KOSPI added 3% in Seoul, while Japan's Nikkei 225 rose 1%, as Asian equities rebounded from a selloff driven by AI-chip jitters and easing oil prices.

"The sell-off today is largely a knee-jerk reaction and overdone," said Jing Jie Yu, equity analyst at Morningstar. "The dominant position of global chipmaking leaders is unlikely to be threatened meaningfully."

The rally followed a 10.8% plunge in South Korea's benchmark on Tuesday — its worst session in years — triggered by sharp drops in SK Hynix and Samsung Electronics. The KOSPI had surged as much as 116% earlier this year before crashing into a bear market, with more than 300,000 retail trading accounts wiped out on a single day following margin calls, according to Goldman Sachs.

The rebound comes as investors weigh competing risks: Brent crude fell 4.4% to $82.08 a barrel, easing inflation concerns, while traders priced in a 31.5% probability of a Federal Reserve rate hike this week, according to CME data.

The KOSPI's recovery was broad-based, though trading remained volatile after Tuesday's circuit-breaker triggers. The Bank of Korea raised rates earlier this month for the first time in over three years, while regulators halted new single-stock leveraged ETF listings after the index fell 26% from its highs. Margin debt in South Korea had grown over 40% year-over-year, according to Leuthold Group data, as retail investors borrowed heavily to chase AI-related gains in Samsung and SK Hynix.

In the U.S., the S&P 500 rose 0.2% to 7,428.78 on Tuesday, the Dow Jones Industrial Average jumped 537 points, or 1%, to 52,747.32, while the Nasdaq composite slipped 0.2% to 24,876.91. The mixed session reflected a rotation out of AI winners — Micron Technology dropped 8.9%, Advanced Micro Devices fell 8.1% — into value names like Coca-Cola, which gained 5% on strong revenue growth.

The 10-year Treasury yield fell to 4.60% from 4.65%, as a weaker-than-expected consumer confidence reading and falling oil prices tempered expectations for a hawkish Fed. The USD/KRW exchange rate remained in focus as traders monitored the Bank of Korea's policy path. Investors now look to the Fed's two-day meeting concluding Wednesday and earnings from Meta Platforms and Microsoft, which could provide further direction on AI investment trends.

This article is for informational purposes only and does not constitute investment advice.