Intraday Surge of 2000 Points! What's Happening in Japanese and South Korean Stock Markets?

Japanese and South Korean stock markets collectively exploded! On the afternoon of February 3rd, the Japanese and South Korean stock markets continued their upward trajectory. Among them, the Nikkei 225 index surged by 2000 points intraday, with gains once exceeding 4%, hitting a new historical high; the Korea Composite Stock Price Index (KOSPI) soared over 6% at one point, completely recovering the previous day's losses. Semiconductor and chip stocks collectively strengthened. As of the time of writing by Securities Times China, SK Hynix and Samsung Electronics both saw gains exceeding 8%, Advantest surged over 7%, Hanmi Semiconductor rose over 6%, and Tokyo Electron increased over 5%. Japanese Stock Market Soars 2000 Points On Tuesday, the Japanese stock market experienced a significant rally, with the Nikkei 225 index briefly climbing over 4% intraday, and the TOPIX index gaining over 3%. As of the time of writing by Securities Times China, the Nikkei 225 index was up over 2000 points, a gain of 3.86%, while the TOPIX index advanced 3.09%. On the news front, Japan's Finance Minister, Shunichi Suzuki, stated on February 3rd that Prime Minister Takaichi Sanae did not overemphasize the benefits of a weak yen during the past weekend. This move suggests Suzuki is attempting to maintain market vigilance regarding the risk of government intervention. Suzuki stated, "Takaichi Sanae merely gave a textbook response regarding the yen exchange rate and did not particularly emphasize the benefits of a weak yen." He added that he agrees with Takaichi's stance that a weaker yen has both advantages and disadvantages. Suzuki also emphasized that Japan will continue to coordinate closely with the United States, hinting at the possibility of joint action in the markets. He indicated, "Japan and the U.S. have been coordinating, including at my level and among senior monetary policy officials. We reached a joint statement last September, so we will continue to coordinate in line with that agreement and take appropriate responses." Suzuki's comments came after Takaichi Sanae stated at a campaign rally last Sunday that a weak yen could present significant opportunities for export-oriented industries, which cooled speculation that her government was preparing to intervene in the currency market. The yen fell back to the 155 level on Monday and hovered around 155.50 on Tuesday morning. Takaichi also mentioned that a weak yen benefits Japan's Foreign Exchange Fund Special Account, which the government uses for various purposes, including currency intervention. Later, she posted on X that her intention was to emphasize the need to build an economy resilient to exchange rate fluctuations, an effort seemingly aimed at quelling speculation that she was downplaying the impact of the recent yen weakness. With the Japanese lower house election approaching on February 8th, traders are bracing for heightened market volatility. They are betting that the Liberal Democratic Party, led by Takaichi Sanae, might secure a significant victory. Such an outcome could pave the way for more aggressive fiscal policies, potentially driving inflation higher and putting pressure on the yen and Japanese government bonds. South Korean Stock Market Surges, Chip Stocks Explode On February 3rd, the South Korean stock market also experienced a major surge. The KOSPI index soared over 6% intraday, with Samsung Electronics briefly surging over 10%, marking its largest single-day gain since March 2020. As of the time of writing by Securities Times China, the KOSPI was up 5.87%, Samsung Electronics gained over 9%, SK Hynix rose over 8%, and Hanmi Semiconductor increased over 6%. Tuesday's rebound in the South Korean market was primarily driven by local institutional investors, with foreign investors also being net buyers of stocks. On Tuesday, South Korea's Vice Finance Minister, Lee Hyung-il, stated that the government has "sufficient policy capacity" to deal with any external uncertainties. Lee also mentioned that, given the apparent intensification of volatility in the foreign exchange market, the government would closely monitor financial market movements. Analysts at J.P. Morgan suggested that after breaking through the 5,000-point level in January, the benchmark KOSPI could potentially reach 7,500 points by 2026. They set a base-case target of 6,000 points for the index this year, with an optimistic scenario target of 7,500 points. In a report, J.P. Morgan stated that the index's rise was led by heavyweight stocks Samsung Electronics and SK Hynix, driven by rising chip prices—a trend they believe could persist until the end of 2027. J.P. Morgan sees further upside potential of 45%-50% for these two stocks by 2026. The firm also forecasts approximately 20% earnings per share growth in other non-memory industrial sectors. Ongoing corporate governance, market, and tax reforms in South Korea are expected to serve as additional catalysts. Other analysis points out that the significant gains in Samsung Electronics and SK Hynix serve as a reminder that the AI investment boom is shifting towards infrastructure, benefiting South Korean chipmakers who are at the core of the industry's supply chain. South Korea has positioned itself as a key supplier to global industry leaders like NVIDIA. Yiping Liao, a Portfolio Manager at Franklin Templeton Global Investment, commented, "South Korea is highly concentrated in specific parts of the tech supply chain. The astonishing rise in SK Hynix and Samsung Electronics' share prices seems to be because we are in an unprecedented memory chip shortage cycle." Simon Woo, Head of Korea Research at Bank of America Global Research in Seoul, predicts the memory chip supercycle will last until 2027, stating, "Memory chips have become a key strategic asset for U.S. tech giants, which is distinctly different from earlier cycles when memory was seen merely as a disposable component for PCs and smartphones. This shift has elevated the status of the memory industry." Timothy Moe, Chief Asia Pacific Equity Strategist at Goldman Sachs Group, expects the semiconductor sector to contribute about 60% of the forecasted earnings growth for South Korean stocks this year.