Korean Stocks Recover on Chipmaker Gains Following Historic Market Decline

South Korean Equities Bounce Back from Record Slump

Kospi surged as much as 12% on Thursday, the largest intraday gain since October 2008, following a 13% jump in Samsung Electronics Co. and SK Hynix Inc., the country's chip heavyweights.

The swift turnaround comes after Korean shares plummeted to the brink of a bear market in just a few sessions, a result of a global selloff driven by Middle East tensions and a broad de-risking move. The market fell nearly 20% from its peak in just a matter of days, one of the worst-hit Asian markets.

Korean authorities briefly halted program trading in Kospi and Kosdaq markets after futures jumped at the open. Foreigners and retail investors were net buyers of Kospi shares during morning trading, while local institutions sold.

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The slide earlier this week was driven by a jump in oil prices caused by the Iran war, which raised fears over inflation and a potential hit to growth. The rapid unwinding of crowded trades, particularly in the technology sector, exacerbated the selloff.

Despite the plunge, the Kospi remains up more than 30% this year, leaving investors to weigh whether this week's volatile swings mark the end of an overheated rally or the start of a more selective phase of opportunity in Asia's fourth-largest economy.

Some investors, such as Rob Li, managing partner at Amont Partners, a hedge fund in New York, believe that there are good opportunities to selectively buy Korean equities after the crash, citing companies with strong free cash flow generation and reasonable prices, such as SK Hynix.