Kospi recovers 7,700 after early plunge as Samsung Electronics, SK hynix rebound

The Kospi tumbled at the open Wednesday before staging a sharp recovery, as a selloff in semiconductor stocks and rising US-Iran tensions weighed on sentiment.

As of 9:56 a.m., the Kospi was up 1.04 percent at 7,736.07, according to Korea Exchange.

The index opened down 2.66 percent from Tuesday at 7,452.48, and fell as low as 7,352.89 in early trade before reversing course and swiftly reclaiming the 7,700 level.

Samsung Electronics, which had fallen sharply on Tuesday, was trading up 0.51 percent at 297,500 won at the same time.

The stock opened down 3.55 percent at 285,500 won and slid as far as 4.39 percent to 283,000 won shortly after the bell, but subsequently recovered those losses.

SK hynix, the second-largest stock by market cap, was up 5.04 percent at 2.312 million won. The chipmaker had at one point fallen 5.04 percent to 2.09 million won before quickly erasing the decline and turning positive.

The three major US indexes all closed lower overnight on weakness in semiconductor stocks and heightened tensions between the United States and Iran over the Strait of Hormuz, dragging the domestic market lower at the open. The scale of Tuesday's losses, however, appears to have drawn bargain hunters back into the market.

The Dow Jones Industrial Average fell 0.25 percent from the previous session, while the S&P 500 and the tech-heavy Nasdaq Composite dropped 0.45 percent and 1.16 percent, respectively.

The Philadelphia Semiconductor Index tumbled 4.65 percent. Analysts said investor sentiment toward AI chip stocks had soured even after Samsung Electronics reported earnings that beat market expectations, with the company's shares tumbling in domestic trade. Samsung Electronics and SK hynix had closed down 6.92 percent and 6.06 percent, respectively, on Tuesday.

SK Square, Samsung Electronics preferred shares and Hyundai Motor were also edging up alongside Samsung Electronics and SK hynix.

Retail participation was subdued Wednesday. Individual investors and foreign investors were net selling 389.2 billion won and 175.7 billion won, respectively, while institutions were net buying 594.1 billion won, providing support for the index. Foreign investors have been net sellers for 14 consecutive trading sessions, while retail investors — who had been net buyers of more than 5 trillion won over the previous two sessions — turned to selling.

Analysts attributed the cautious mood to heightened market volatility and renewed geopolitical tensions in the Middle East surrounding the Strait of Hormuz.

International oil prices surged after reports that three vessels passing through the Strait of Hormuz had come under attack beginning Tuesday. Brent crude futures for September delivery and West Texas Intermediate futures for August delivery settled up 3.01 percent and 2.76 percent, respectively, from the previous session.

The Kosdaq was down 1.33 percent at 820.20 at the same time, with top-cap stocks including Alteogen, Ecopro BM, Ecopro and Rainbow Robotics all falling.

Han Ji-young, a researcher at Kiwoom Securities, said volatility was likely to remain elevated from the start of the session due to external headwinds. "However, the prior pricing-in of the US semiconductor selloff, the paring of losses by those stocks late in the session, and the Kospi's 9.7 percent decline this month through a series of sharp drops should draw bargain buyers in, giving the index the resilience to attempt an intraday rebound," Han said.