GoKawiilEmployees celebrate the close of trading for the year at the Korea Exchange (KRX) on Monday, Dec. 30, 2013.
South Korean stocks rallied Thursday, lifting the benchmark Kospi into a technical bull market as a global revival in the AI trade fuels a sharp recovery after last month's historic sell-off.
The Kospi jumped over 4% in early trade, taking its rebound from its July 30 low to roughly 23%, data from LSEG showed.
Index heavyweights Samsung Electronics and SK Hynix led the gains, with the chip giants rising over 4% and 7%, respectively.
Investor appetite for technology hardware stocks is returning as the latest earnings from global tech giants point to continued heavy spending on artificial intelligence.
The latest leg of the Kospi's rebound has been fueled by renewed optimism over artificial-intelligence spending, helping revive interest in South Korea's heavyweight semiconductor stocks.
"The AI spending boom is far from over," David Morrison, senior market analyst at Trade Nation said in a note late Tuesday, pointing to strong results from U.S. AI-related companies. Supermicro and cloud provider CoreWeave surged overnight following better-than-expected results.
The developments have provided a fresh boost to Korean chipmakers, whose fortunes are closely tied to demand for the memory chips used in AI infrastructure. Samsung Electronics and SK Hynix have led the Kospi's advance, extending a sharp rebound from last month's technology-driven sell-off.
The rally in South Korean stocks has room to run further as strength returns to the country's heavyweight memory chipmakers, according to Fundstrat Global Advisors.
Mark Newton, the firm's head of technical strategy, said the iShares MSCI South Korea ETF has broken above a key technical level on the back of gains in Samsung Electronics and SK Hynix, improving the near-term outlook for Korean equities. The ETF's latest move confirmed a reversal pattern that Newton said "looks attractive technically for further near-term gains."
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