South Korean stocks rapidly erased losses Wednesday as local retail investors bought into a wave of selling by foreign funds.
The Kospi rose 0.3%, reversing an early decline of as much as 3.2%. Samsung Electronics Co. pared most of its drop, after briefly plunging as much as 6.1% on its failure to reach a wage agreement with its biggest labor union.
Samsung peer SK Hynix Inc. reversed an early loss, shaking off investor concerns of overheating that dragged down AI-related stocks in New York on Tuesday. The Korean memory makers’ shares are up more than 100% each so far in 2026.
“For Korean equities, the problem is concentration — this market is a two-stock story,” said Dilin Wu, a research strategist covering cross-asset markets at Pepperstone Group Ltd. “The AI hardware thesis that drove the Kospi’s record run is still intact — but execution risk on the supply side is now sitting right next to it, and that’s a harder position to hold with conviction.”
Foreign funds have sold more than $45 billion worth of Kospi stocks so far this year. Buying by local institutional and retail investors has compensated, with the index’s 82% year-to-date gain the best in the world.
“We see further upside for the Kospi thanks to structural stories including reform,” Morgan Stanley analysts including Joon Seok wrote in a report Wednesday, raising their 12-month Kospi target to 8,500 from 6,500. While there are external uncertainties such as the ripple effects from the Middle East situation, “the Kospi should be resilient.”
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