South Korea’s KOSPI surged about 15% to 6,376.68 by midday Friday, recovering a large portion of the losses recorded during a three-day semiconductor selloff. The index climbed as much as 16.8% to 6,531.71 earlier in the session before giving back part of the advance.
Samsung Electronics rose about 21%, while SK Hynix gained 24.6%. Both stocks had climbed even further shortly after the opening bell, with Samsung reaching a 22.5% gain and SK Hynix advancing 27.7%. The rebound followed stronger Wall Street technology trading and renewed confidence in artificial intelligence spending after Microsoft and other major U.S. companies reported expanding cloud and data-center demand.
Government Creates 20 Trillion Won Investment Account
South Korea will establish a strategic sovereign wealth fund with initial capital of at least 20 trillion won, equivalent to roughly $13.9 billion. The fund will operate through a dedicated investment account within the Korea Investment Corporation and will be permitted to invest in AI, semiconductors, robotics, defense, aerospace, biotechnology, nuclear power and quantum technology.
The programme can also finance data centers, energy clusters and overseas companies supporting Korean industrial supply chains. The government plans to contribute about 16 trillion won of shares held in public financial institutions and another 4 trillion won of shares received through inheritance and gift-tax payments.
The policy announcement added domestic support to a rebound already underway across Asian chip markets. Japan’s Nikkei also gained more than 4%, while semiconductor and AI infrastructure stocks recovered from losses tied to Chinese competition fears and concerns over the durability of global technology spending.
Samsung And SK Hynix Reverse Three-Day Rout
Friday’s rally followed an 8% KOSPI decline that pushed the index toward its largest July loss on record. That session came after a separate near-10% collapse triggered a 20-minute market-wide trading halt.
The selloff erased almost 40% of the index’s value from its June peak and removed more than $2 trillion from South Korean equities at its deepest point. Samsung and SK Hynix, which together represent more than half of the benchmark’s weighting, amplified both the decline and Friday’s rebound.
Leveraged Investors Remain Deeply Exposed
The market reversal forced widespread liquidations among retail traders using margin accounts and single-stock leveraged exchange-traded products. An estimated 360,000 South Korean margin accounts were fully liquidated, while more than 1.2 million accounts reportedly received margin calls.
Assets in leveraged products tied heavily to Samsung and SK Hynix fell from around $50 billion to between $16 billion and $17 billion during the rout. Regulators have stopped new sales of some products and are preparing higher deposit requirements and investor exposure limits.
The government plans to submit amendments to the Korea Investment Corporation Act in August, seek passage through the National Assembly before year-end and launch the strategic fund in 2027.
