The Korea Composite Stock Price Index (Kospi) rebounded to close higher on Thursday, following a cumulative plunge of 16% over the prior two sessions. Market sentiment was buoyed by Samsung Electronics reporting a second-quarter net profit surge of over 250 times year-on-year, combined with the government's new measures to further restrict retail investor participation in leveraged ETFs.
The Kospi index briefly climbed more than 4% and was up 2.76% as of writing, with Samsung Electronics shares jumping 7.91%. SK Hynix shares rose 2%, recovering from a nearly 25% drop over the previous two trading days.
On July 30, Samsung Electronics announced second-quarter sales of 171.5 trillion won, a 130% increase year-on-year. Net profit surged 1,299.9% to 71.62 trillion won, surpassing the estimate of 68.36 trillion won. Consolidated operating profit for the second quarter reached 89.49 trillion won, skyrocketing 1,813.8% from a year earlier, which exceeded market forecasts of 84.1894 trillion won by 6.3%. Both operating profit and sales have set new quarterly records for three consecutive quarters. These results surpassed analyst expectations, driven by sustained strong demand from the artificial intelligence sector boosting its memory chip business.
Samsung Electronics stated that it expects semiconductor demand to remain robust in the second half of the year, supporting continued profit growth. Josh Gilbert, a senior analyst at eToro for Asia Pacific and the Middle East, commented: "This level of volatility is now the cost of participating in the market, rather than evidence of the end of the AI narrative." After a massive loss in market value over two consecutive days of sharp declines, senior officials from South Korea's Ministry of Finance, the Bank of Korea, and financial regulators held an emergency meeting on Wednesday evening. They pledged additional measures to stabilize the stock market and restrict retail investor participation in leveraged ETFs. According to the Ministry of Finance, new measures include setting a cap on the proportion of leveraged ETF holdings in an investor's total assets and increasing transaction costs to curb excessive retail participation.
Amid growing investor doubts about the sustainability of the AI trading narrative, the Kospi index has fallen approximately 40% from its June peak, with the decline deepening this week. On Wednesday, the Kospi index triggered a circuit breaker for the second consecutive trading day, a first in its history.
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