This article first appeared on GuruFocus.
South Korean chip shares came roaring back, showing investors may not be ready to walk away from the artificial intelligence trade. The Kospi jumped 8.2% after a three-day slide that dragged the benchmark 15% below its record high. Samsung Electronics (SSNLF) bounced 9%, while SK Hynix (HXSCL) surged 16%, making memory chipmakers the center of Tuesday’s rebound.
The recovery followed a sharp unwind in an AI-fueled rally that had previously pushed the Kospi more than 100% year-to-date. Monday’s selloff triggered circuit breakers and briefly suspended trading, with leveraged ETFs and margin debt possibly making the swings more violent. Forced liquidation ratios for shares bought with short-term loans jumped above 8% on Friday and Monday, compared with around 1% at the end of May.
The market is still running hot. Korean equity implied volatility rose 15 points to above 90 for the first time on Tuesday, while trading curbs were triggered again across the Kospi and Kosdaq. Still, domestic institutions stepped in as buyers, even as foreign investors extended their selling streak and retail investors also sold. With the Kospi still up about 92% for 2026, the rebound could suggest investors are treating the chip selloff as a painful reset rather than a full break in the AI cycle.