KOSPI rebounded on the morning of July 29, recovering from the previous day's 'Black Tuesday' decline. The index opened 1.09% higher at 6089.11 and touched 6228.52 at 9:13 AM, marking a 3.4% gain, before paring gains to 1.4% by 9:26 AM. Institutional investors drove the recovery with net purchases exceeding ₩700 billion, offsetting overnight weakness in US semiconductor stocks and SK Hynix's below-expectation Q2 earnings. The rally occurred amid what analysts describe as extreme oversold conditions in Korean stocks.
Institutional Investors Net Buy ₩700 Billion
Institutional investors purchased ₩700 billion worth of stocks (combined Korea Exchange and Nexttrade data) during morning trading. Individual investors sold ₩600 billion, while foreign investors sold ₩100 billion.
Samsung Electronics and SK Hynix Lead Gains
Samsung Electronics rose 4% during morning trading. SK Hynix, which announced Q2 earnings on July 29, gained 1%. Hyundai Motor climbed 3%, while Kia advanced 2%. SK Square, KB Financial, Samsung Electro-Mechanics, and Shinhan Financial Group each rose more than 1%.
KOSDAQ Index Reverses to Decline
The KOSDAQ index opened 1% higher but reversed to a 0.85% decline by 9:29 AM, trading at 699.83. Alteogen fell 0.8%, while Legochem Biosciences dropped 3%. HLB, Peptron, ABL Bio, Pharma Research, Ecopro BM, and PSK each declined more than 2%.
Analysts Cite Oversold Conditions and Earnings Catalysts
Han Ji-young, a researcher at Kiwoom Securities, stated that US semiconductor stocks fell due to China-related concerns and AI profitability worries, but the impact on Korean markets was limited because domestic stocks had already priced in the decline. Han noted that upcoming earnings from Korean semiconductor companies and US big tech firms will determine whether AI profitability concerns can be resolved, serving as a turning point for market direction.
Han assessed that Korean stocks are in an unprecedented oversold phase, stating that current declines are excessive given that memory peak-out concerns, Chinese capacity expansion competition, and Federal Reserve rate hike worries remain potential risks rather than realized threats. Han explained that securing a rebound catalyst depends on profit credibility restoration through earnings and guidance from Samsung Electronics and SK Hynix, improvements in US hyperscalers' cash flow and operating margins, and continued reduction of single-stock leverage influence.
Kim Seok-hwan, a researcher at Mirae Asset Securities, stated that for the rebound to be meaningful, at least a 50% retracement of the previous day's decline must occur, which would help calm investor sentiment.
FAQ
What caused KOSPI to rebound on July 29?
Institutional investors drove the recovery with net purchases exceeding ₩700 billion, despite overnight weakness in US semiconductor stocks and SK Hynix's below-expectation Q2 earnings.
How did Samsung Electronics and SK Hynix perform on July 29?
Samsung Electronics rose 4% during morning trading, while SK Hynix, which announced Q2 earnings on the same day, gained 1%.
Why did analysts describe Korean stocks as oversold?
Analysts stated that Korean stocks are in an unprecedented oversold phase, with current declines deemed excessive given that concerns about memory peak-out, Chinese capacity expansion, and Federal Reserve rate hikes remain potential risks rather than realized threats.
