Japanese and South Korean stock markets collectively exploded! On the afternoon of February 3rd, both 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 Index (KOSPI) at one point soared over 6%, completely recovering from 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 rose over 7%, Hanmi Semiconductor climbed over 6%, and Tokyo Electron increased by more than 5%.
The Japanese stock market experienced a massive surge of 2000 points on Tuesday, with the Nikkei 225 index rallying sharply intraday, at one point gaining over 4%, while the TOPIX index rose more than 3%. As of the time of writing by Securities Times China, the Nikkei 225 was up over 2000 points, a gain of 3.86%, and the TOPIX index advanced 3.09%. On the news front, Japanese Finance Minister Shunichi Suzuki stated on February 3rd that Prime Minister Takaichi Sanae did not overemphasize the benefits of a weak yen during the previous weekend. This move suggested Suzuki is attempting to maintain market vigilance regarding the risk of government intervention. Suzuki remarked, "Prime Minister Takaichi simply gave a textbook response to yen exchange rates and did not particularly stress the advantages of a weak yen." He added that he agrees with Takaichi's stance that yen depreciation 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 market. He stated, "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 Prime Minister Takaichi said 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, clarifying that her intention was to emphasize the need to build an economy resilient to exchange rate fluctuations, apparently to quell speculation that she was downplaying the impact of the recent yen weakness. With the general election for Japan's lower house approaching on February 8th, traders are preparing for heightened market volatility. They are betting that the Liberal Democratic Party, led by Takaichi, may 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.
The South Korean stock market also experienced a major explosion on February 3rd. The Korea Composite Index surged over 6% intraday, while Samsung Electronics saw gains exceeding 10% at one point, marking its largest increase since March 2020. As of the time of writing by Securities Times China, the Korea Composite Index was up 5.87%, Samsung Electronics rose over 9%, SK Hynix gained over 8%, and Hanmi Semiconductor increased by more than 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 cope with any external uncertainties. Lee also mentioned that, given the apparent intensification of volatility in the foreign exchange market, the government will closely monitor financial market movements. Analysts at J.P. Morgan suggested that after breaking through the 5000-point level in January, the benchmark Korea Composite Index could potentially reach 7500 points by 2026. They set a base-case target of 6000 points for the index this year, with an optimistic scenario target of 7500 points. In a report, J.P. Morgan noted that index heavyweights Samsung Electronics and SK Hynix are leading the KOSPI's gains, driven by rising chip prices—a trend that may persist until the end of 2027. J.P. Morgan believes these two stocks still have 45%-50% upside potential by 2026. The firm also forecasts approximately 20% growth in earnings per share for 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 rises in Samsung Electronics and SK Hynix serve as a reminder that the AI investment boom is shifting towards infrastructure, benefiting South Korean chipmakers at the core of the industry's supply chain. South Korea has positioned itself as a key supplier for global industry leaders like NVIDIA. Yiping Liao, a portfolio manager at Franklin Templeton Global Investment, stated, "South Korea is highly concentrated in specific segments of the tech supply chain. The astonishing surge 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, saying, "Memory chips have become a key strategic asset for U.S. tech giants, which is starkly 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 industry to contribute about 60% of the anticipated earnings growth for South Korean stocks this year.
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