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South Korea’s KOSPI stock index rebounded sharply on Friday, jumping nearly 5% to exit technical bear market territory following a volatile week of trading. According to Reuters, the benchmark index had plunged more than 20% from its record close of 9,114.55 on June 22, sliding into a bear market on July 8 after a 5.35% drop to 7,246.79. Despite the steep correction, the index remains up roughly 76% year-to-date, retaining its position among global equity leaders.
## Chipmaker Volatility and the AI Spending Debate
The sudden market swing was driven by heavy losses in dominant semiconductor stocks amid growing questions over whether artificial intelligence spending can maintain its current pace. Samsung Electronics and SK Hynix, which account for nearly half of the KOSPI’s total weight, experienced steep pullbacks as traders reassessed the durability of the AI chip boom.
According to Financial Times reporting, anxiety over risky investment products and the broader sustainability of the infrastructure buildout fueled the selloff. Because Samsung and SK Hynix drove roughly 70% of the index’s gains earlier in the year, the broader market remained acutely vulnerable to sudden shifts in investor sentiment regarding the technology sector.
## Regional Performance Divergence in Asia
While South Korean equities recovered ground, broader regional markets experienced mixed results. The Nikkei in Japan posted gains, while Chinese markets slipped during the session.
The swift recovery on Friday pushed the KOSPI back above the 20% drawdown threshold, reversing the rapid descent that began in mid-June. According to Economic Times coverage, the index continues to hold a substantial year-to-date advantage following a historic 2025 performance that saw the market gain 76% in its best annual return since 1999.
## Goldman Sachs Projections and Market Outlook
The recent turbulence tested high institutional conviction in the region. Goldman Sachs had previously raised its 12-month KOSPI target to 12,000 in early June, citing the index as its top regional pick.
The investment bank’s outlook was anchored by a forecast of 300% earnings growth for 2026, marking the strongest annual profit expansion in any Asian market since the recovery following the 1999 Asian financial crisis. Friday’s rebound indicates that buyers are stepping back into major chip equities, though analysts note that future market stability depends heavily on sustained demand for advanced AI hardware.