Kospi climbs 1.5% on Nvidia earnings beat, but rate hike caps rally short of 7,000

The Kospi surged toward the 7,000 mark during Thursday's session, buoyed by a blowout earnings report from AI bellwether Nvidia, but gave back a large portion of its gains after the Bank of Korea raised its benchmark interest rate, falling short of reclaiming that threshold.

The index closed at 6,912.37, up 104.16 points, or 1.53 percent, from Wednesday, according to Korea Exchange. It opened 187.91 points, or 2.76 percent, higher at 6,996.12 — the session high — before the advance narrowed to as little as 0.49 percent around 10 a.m.

Foreign investors, who had been net sellers for four consecutive sessions through Wednesday, turned net buyers at the close, purchasing a net 152.4 billion won ($110 million). Institutions also bought on balance, posting net purchases of 176.3 billion won. Retail investors were net sellers of 1.91 trillion won.

The rally was driven by Nvidia's earnings, which lifted investor sentiment. Results released after the New York market close in the early hours of Thursday Korean Standard Time showed the chipmaker posted a 13th consecutive quarter of record sales, underscoring the sustained boom in AI infrastructure investment.

Nvidia said its second-quarter sales rose 106 percent from a year earlier to $96.22 billion, topping market expectations. CEO Jensen Huang said the strong momentum would carry into the third quarter.

Share buybacks by Samsung Electronics and SK hynix also provided a tailwind. Other corporate investors posted net purchases of 1.6 trillion won on the day, extending their streak of trillion-won-plus net buying to six consecutive sessions. Since Aug. 19, other corporates have accumulated a net 8.75 trillion won in the Kospi market.

The category has emerged as a major force in domestic equity flows, driven by Samsung Electronics' buybacks for employee stock compensation and SK hynix's purchases for share cancellation.

However, the Bank of Korea's Monetary Policy Board voted to raise the benchmark interest rate by 25 basis points to 3.00 percent from 2.75 percent, dampening the upward momentum.

It was the first time the board had raised rates in back-to-back meetings since its seven consecutive hikes from April 2022 through January 2023 — a gap of three years and seven months. Bank of Korea Governor Shin Hyun-song said the decision reflected a judgment that "preemptive action in monetary policy was necessary to promote macroeconomic stability, including price stability."

Samsung Electronics closed up 1.72 percent from Wednesday at 266,000 won. The stock jumped 3.25 percent at the open before trimming its advance.

SK hynix finished up 2.49 percent at 1.73 million won. The stock surged more than 5 percent at the open and briefly hit 1.79 million won, a gain of 5.92 percent, before surrendering part of its intraday gains.

Among other large-cap stocks, SK Square gained 0.95 percent, Samsung Electro-Mechanics rose 4.14 percent and LG Energy Solution advanced 5.56 percent. Hyundai Motor fell 2.45 percent, Samsung Biologics slipped 0.31 percent, Samsung Life Insurance declined 0.81 percent and Samsung C&T dropped 3.10 percent.

The Kosdaq closed up 10.78 points, or 1.30 percent, at 837.65. The index opened 1.55 points, or 0.19 percent, higher at 828.42 and briefly turned negative after the rate decision before recovering. On the Kosdaq, foreign investors and institutions were net buyers of 89 billion won and 61.9 billion won, respectively, while retail investors were net sellers of 149 billion won.

Ecopro rose 5.75 percent and Ecopro BM gained 5.83 percent, while Rainbow Robotics added 4.55 percent and Jusung Engineering climbed 3.29 percent. Alteogen ended flat. HLB fell 2.88 percent, PharmaResearch dropped 2.15 percent and Silicon2 declined 5.12 percent.

The won continued to strengthen against the dollar. As of 3:30 p.m., the won-dollar exchange rate in the Seoul foreign exchange market stood at 1,380.9 won, down 3.9 won from Wednesday's closing rate.