The Kospi entered a technical bull market on August 13, rising 22% from its July 30 low, as Samsung Electronics and SK Hynix surged on AI memory demand. Macquarie Capital set a year-end target of 8,000, implying a further 17% upside.
The rally follows a 40% plunge from the June peak, with foreign investors returning after heavy selling. But the rebound is narrowly concentrated in two stocks, raising questions about its durability.
Two stocks accounted for 71 per cent of the Kospi’s July losses. Now they are carrying the rebound. Samsung Electronics and SK Hynix have pulled South Korea’s benchmark index into a technical bull market in less than three weeks, driven by a single narrative: the world is running out of memory chips for artificial intelligence.
Macquarie Capital analysts called it “the worst memory crunch in history” and said supply constraints are unlikely to ease within three years. The bank’s year-end target of 8,000 for the Kospi implies another 17 per cent gain from current levels. But the rally’s narrow base is the number that matters. When two stocks account for nearly three-quarters of a market’s losses and then its recovery, the bull market label masks a concentrated bet on a supply bottleneck that has not yet been independently verified.
The two names carrying the index
On August 12, foreign investors bought a net 2.84 trillion won of Kospi stocks. Samsung Electronics rose 6.68% and SK Hynix 5.54% that day, with the index closing at 6,579. The next day, August 13, Samsung closed 5% higher and SK Hynix 6% higher, with the index trading near 6,813, or 22% above the July 30 trough. The buying was not broad; it was a semiconductor bid.
Qian Zhang, an emerging markets specialist at Baillie Gifford, said that AI agents and physical AI have driven memory demand to surge against limited supply capacity. Seo Sang-young and Kim Seok-hwan, researchers at Mirae Asset Securities, noted that U.S. AI infrastructure results showed actual orders, reinforcing the rebound in Korean chip shares.
The U.S. CHIPS Act has earmarked up to $450 million in direct subsidies and $500 million in loans for SK Hynix’s advanced packaging plant in West Lafayette, Indiana. That concrete policy backstop adds a layer of government support to the memory thesis. But whether supply constraints will truly persist for three years, as Macquarie asserts, remains an open question — independent industry trackers have yet to confirm that timeline.
A crunch that feeds on itself
The memory supply squeeze is physical, not financial. TrendForce said on August 4 that DRAM supply would stay tight through 2027. Synopsys CEO Sassine Ghazi had already warned in January that the chip crunch would continue through 2026 and 2027. When the world’s largest memory makers are sold out and new fabs take years to build, every AI earnings beat tightens the bottleneck further.
The Kospi’s structure amplifies this dynamic. Samsung and SK Hynix together dominate the index, so any memory-cycle swing becomes a market move. The July selloff that wiped out Samsung’s record profits was a preview of how quickly the two-stock trade can reverse. Now the same concentration is powering the rebound.
The next earnings from Samsung and SK Hynix, expected in late October, will show whether the memory crunch is real enough to justify the rally, or if the two-stock bull market is running on fumes.
Beyond the headline
The Money Trail
The rally’s gains are pooling in a handful of stocks rather than spreading across the market. When capital concentrates in Samsung and SK Hynix, index moves get amplified, rewarding investors already holding semiconductor-heavy benchmarks or thematic AI funds.
The Reach
A stronger Kospi feeds into global tech portfolios through Korea-linked ETFs and memory supply contracts. If Korean chipmakers stay bid, they can reset expectations for global memory pricing and the earnings outlook for hardware supply chains far beyond Seoul.
The Timing
This week’s rebound is reacting to a fresh wave of AI-infrastructure news while the memory trade is still recovering from July’s washout. That makes the rally sensitive to whether foreign buying continues and whether the next earnings cycle confirms the demand story.
What the two-stock rally means for you
With the Kospi’s bull market hinging on two stocks and an unverified supply crunch, investors and expats face distinct decisions.
- Western investor with South Korea equity exposure
Check the holdings of Korea-heavy ETFs like the iShares MSCI South Korea ETF (EWY) for concentration risk. Review Samsung and SK Hynix earnings calendars on their investor-relations sites; if the AI-memory thesis softens, the rally could reverse quickly. Consider trimming if the index’s breadth does not improve.
- Global semiconductor procurement manager
Re-evaluate memory chip procurement forecasts now. Expect price increases and supply constraints for at least the next year. Lock in contracts with Samsung and SK Hynix where possible, as the crunch could worsen before new capacity arrives.
- Analyst tracking global AI infrastructure spending
Incorporate Macquarie’s 8,000 target and the memory crunch narrative into sector models. Monitor U.S. AI company capex announcements for confirmation. The Kospi’s move is a real-time signal of hardware demand that can sharpen your outlook.
- Western expat in South Korea paid in foreign currency
Monitor the won’s exchange rate. Sustained foreign inflows could strengthen the currency, raising your local costs. Consider hedging remittances if the won appreciates further against your home currency.
Explainer
- Kospi
- South Korea’s benchmark equity index, tracking all common stocks listed on the Korea Exchange. It is heavily weighted toward semiconductor exporters, with Samsung Electronics alone often accounting for more than 20% of the index. The Kospi’s performance is tightly linked to global memory-chip pricing and AI infrastructure spending.
- Technical bull market
- A market condition defined by a 20% rise from a recent closing low, used by traders and analysts to signal a shift in momentum. It does not guarantee a sustained advance; it is a price-based threshold. The Kospi crossed this line on August 13, 2026, after rising 22% from its July 30 trough.
- High-bandwidth memory
- HBM is a type of advanced memory chip that stacks DRAM dies vertically, offering far higher data transfer speeds than conventional memory. It is essential for AI accelerators and high-performance computing. Samsung and SK Hynix dominate global HBM supply, giving them pricing power during AI-driven demand surges.
- CHIPS Act
- The U.S. CHIPS and Science Act, signed in 2022, provides subsidies and tax credits to boost domestic semiconductor manufacturing. In the context of this story, it has allocated up to $450 million in direct funding and $500 million in loans for SK Hynix’s advanced packaging plant in Indiana, reinforcing the company’s U.S. footprint.
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