South Korean stocks swung to a gain after Samsung Electronics Co. reported better-than-expected earnings and the government announced additional measures to help stabilize the market.
The benchmark Kospi Index climbed 4.5% after slumping a combined 16% over the two previous sessions. Samsung shares jumped 7% after its semiconductor unit said net income jumped more than 250-fold in the June quarter. SK Hynix Inc. gained 2.4% after losing almost a quarter of its value in the past two days.
“Volatility like this is now the price of entry, not proof that the AI story is over,” said Josh Gilbert, Asia Pacific and Middle East lead analyst at Etoro Ltd. “After a week where Korean stocks have been whipsawed by a leveraged unwind, investors should expect the volatility to stay elevated. But when the fundamentals are this solid, the market follows.”
Samsung chip unit reported an operating income of 89.2 trillion won in the June quarter. The result compares with the average analyst estimate of 79.3 trillion won. Group-wide net income came to 71.3 trillion won, also beating estimates.
Top officials from the finance ministry, Bank of Korea and financial regulators held an emergency meeting late Wednesday and pledged additional measures to stabilize the stock market and curb retail access to leveraged exchange-traded funds after the two-day rout wiped billions of dollars off investors’ holdings.
New measures included limiting retail involvement in leveraged ETFs by capping exposure at a set share of investors’ total portfolios and raising trading costs, the finance ministry said.
“The measures were very strong,” said Huh Jae-Hwan, an analyst at Eugene Investment & Securities. “They are determined to stabilize the market and to put it negatively, it means they will kill the ETFs. To put it positively, they are trying to change the noises coming from the ETFs so they are very strong measures.”
The Kospi is still down about 35% from its June peak, with losses deepening earlier this week as investors questioned the durability of the artificial intelligence trade. The declines triggered a market-wide circuit breaker on the Kospi for an unprecedented second straight day on Wednesday.
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