KOSPI and KOSDAQ rebounded with buy-side circuit breakers triggered on both indices as semiconductor concentration eased. KOSPI closed up 2.52% at 7475.94 while KOSDAQ surged 5.47% to 837.43. The rally occurred as Samsung Electronics rose 2.52% to 285,000 won and SK Hynix declined 0.27% to 2.18 million won, contrasting with previous sessions where these stocks drove index movements with near-10% daily gains. Despite the sharp rebound, retail investors sold 772.7 billion won worth of KOSPI stocks for the third consecutive day while foreign investors offloaded 329.9 billion won.
KOSPI and KOSDAQ Record Broad-Based Gains with Circuit Breaker Activations
According to Korea Exchange, KOSPI rose 2.52% to close at 7475.94. During intraday trading, KOSPI climbed 5.66% and briefly recaptured the 7700 level before paring some gains. KOSDAQ rebounded 5.47% in a single day to record 837.43. Both markets showed steep upward momentum during trading, triggering buy-side circuit breakers around 1 PM on both KOSPI and KOSDAQ.
The concentration phenomenon that dominated domestic markets recently eased. On KOSPI, 802 stocks rose while only 92 declined. On KOSDAQ, 1,488 stocks closed higher with just 204 falling.
Defense and Nuclear Stocks Rally on Geopolitical Tensions
Defense and nuclear power theme stocks recorded sharp rebounds. LIG Defense & Aerospace rose 7.93% while Hanwha Systems surged 10.82%. Market participants attributed the gains to expectations for additional orders of Cheongung-II air defense interceptor missiles following renewed Middle East conflicts. As military confrontations between the US and Iran continued for a third day and geopolitical risks intensified, attention returned to defense stocks that had been correcting recently. Hyundai Rotem closed up 11.39% at 178,900 won.
Nuclear power theme stocks also rebounded. Doosan Enerbility closed up 6.69% at 78,100 won. Hyundai Engineering & Construction (8.39%) and Daewoo Engineering & Construction (8.79%), which rallied as nuclear power themes earlier this year before correcting, recorded gains.
Kim Se-ryeon, researcher at LS Securities, stated that recent derating of domestic and international nuclear power stocks due to profit-taking has occurred, but fundamentals remain unchanged. Kim noted that Daewoo Engineering & Construction's contract for the Czech Dukovany nuclear plant construction is expected to be signed within the year, while Team Korea's potential order for two units of Vietnam's Ninh Thuan No. 2 nuclear plant is generating expectations.
Financial Stocks Gain on Value-Up Program Expectations
Financial, securities, insurance sectors and holding companies expected to benefit from the value-up program showed notable gains. All four major financial holding companies rose: KB Financial (7.58%), Shinhan Financial Group (4%), Hana Financial Group (4.81%), and Woori Financial Group (4.66%). Securities stocks that had corrected recently on peak-out concerns rebounded sharply. Market participants interpreted the decline as excessive given profit capacity expansion from increasing retail investors. NH Investment & Securities (8.03%), Kiwoom Securities (6.67%), Samsung Securities (5.07%), and Mirae Asset Securities (4.84%) all rose.
Yoon Yu-dong, researcher at NH Investment & Securities, stated that securities stocks face peak-out concerns every quarter, but considering individual stock investment demand, solid retail-centered performance is expected in the second half. Yoon assessed that a decline to an industry price-to-book ratio of 1.2 times is excessive considering the virtuous cycle of profit generation.
Retail and Foreign Investors Continue Net Selling Despite Market Rebound
Retail investors continued selling despite the sharp rebound. Market participants interpreted this as capital outflows due to leading stock corrections and extreme volatility. Retail investors who previously poured trillions of won into domestic markets to support them sold 772.7 billion won worth of KOSPI stocks, marking three consecutive days of net selling. Foreign investors also shifted back to net selling, offloading 329.9 billion won worth of KOSPI stocks.
FAQ
What caused Korean stocks to rebound on this trading day?
Korean stocks rebounded as semiconductor concentration eased, allowing gains to spread broadly across sectors. KOSPI rose 2.52% to 7475.94 and KOSDAQ surged 5.47% to 837.43. On KOSPI, 802 stocks rose while only 92 declined, contrasting with recent sessions where Samsung Electronics and SK Hynix drove index movements with near-10% daily gains.
Why did retail investors continue selling despite the market rally?
Retail investors sold 772.7 billion won worth of KOSPI stocks for the third consecutive day despite the sharp rebound. Market participants attributed this to capital outflows resulting from leading stock corrections and extreme volatility. Foreign investors also shifted back to net selling, offloading 329.9 billion won worth of KOSPI stocks.
Which sectors led the Korean stock market gains?
Defense and nuclear power theme stocks led the rally. Hanwha Systems surged 10.82% and Hyundai Rotem rose 11.39%, with expectations for additional Cheongung-II missile orders following renewed Middle East conflicts. Nuclear power stocks including Doosan Enerbility (6.69%), Hyundai Engineering & Construction (8.39%), and Daewoo Engineering & Construction (8.79%) also rebounded. Financial stocks gained with KB Financial rising 7.58%.
