South Korea’s equity index, KOSPI, has emerged as one of the world’s most volatile equity benchmarks in 2026, swinging between record highs and steep crashes in the recent months. The benchmark’s performance has largely been shaped by news and developments around artificial intelligence (AI), semiconductor stocks and shifts in the global risk sentiment.
How has KOSPI performed in 2026?
The South Korean index, KOSPI, has experienced a roller-coaster ride in 2026, emerging as one of the world’s most volatile index among the major world equity indices. While the benchmark has skyrocketed around 57 per cent year-to-date, those gains have been seen amid sharp rallies, steep corrections and heightened uncertainty.
The index began the year 2026 at 4,224.53 before surging nearly 50 per cent to 6,347.41 by February 27, driven by strong buying in AI-linked technology stocks.
However, the momentum was short-lived. In March, KOSPI corrected sharply to 5,059.45, with the benchmark remaining choppy for the rest of the month, according to TradingView data. Buying interest returned in the following months, propelling the index to a record high of 9,385.59 on June 19, marking the peak of its AI-driven rally.
The euphoria faded in late July. On July 29, KOSPI plunged to 5,262.77 as technology stocks came under pressure, erasing a significant portion of its earlier gains.
The benchmark, however, staged a strong comeback on July 31, surging as much as 18.5 per cent intraday to 6,630.77 as investors returned to beaten-down technology stocks.
Despite the recent correction, KOSPI remains one of the best-performing major equity benchmarks this year. Over the past month, the index has declined 22.9 per cent, while it is down 5.3 per cent over the past week. Even so, its 57 per cent year-to-date gain underscores the strength of the rally that preceded the recent bout of volatility.
| Period | Return |
| Year-to-date | +57% |
| 1 month | -22.9% |
| 1 week | -5.3% |
| July 31 (intraday) | +18.5% |
What’s driving the movement in KOSPI?
Despite the recent swings, KOSPI has risen more than 57 per cent in the first seven months of 2026, comfortably outperforming several of its regional peers. In contrast, India’s benchmark Nifty 50 has declined around 7 per cent over the same period, highlighting the strength of the rally in South Korean equities.
The primary catalyst has been the global artificial intelligence (AI) boom, which has fuelled unprecedented demand for memory chips and advanced semiconductors used in AI servers and data centres. Two of the world’s largest memory chip manufacturers – Samsung Electronics and SK Hynix – have emerged as the biggest beneficiaries of this trend.
The strong performance of these two heavyweights has had an outsized impact on KOSPI. Together, Samsung Electronics and SK Hynix account for more than half of the benchmark’s total market-capitalisation, meaning movements in their share prices significantly influence the benchmark index.
Samsung Electronics stock performance
Samsung Electronics shares have surged more than 120 per cent year-to-date, despite declining 21 per cent over the past month, according to TradingView data.
On July 31, the stock rebounded around 28 per cent, although it remained slightly lower over the past week.
SK Hynix stock performance
SK Hynix has delivered an even stronger performance, soaring around 164 per cent so far this year. However, the stock had fallen more than 35 per cent over the past month and over 9 per cent during the previous week before staging a sharp rebound of nearly 30 per cent on July 31.
| Stock | YTD | 1 Month | 1 Week | July 31 |
| Samsung Electronics | +120.5% | -21% | -0.4% | +28% |
| SK Hynix | +164% | -35% | -9% | +30% |
Why has KOSPI suddenly fallen in the recent weeks?
Despite the strong overall rally, the KOSPI’s sharp correction raised questions about whether the AI-driven surge had run too far, too fast.
- The index’s decline from its record high was largely driven by a concentrated unwind of the AI and semiconductor rally that had propelled it to record levels in June. As investors reassessed lofty valuations following months of outsized gains, heavy selling emerged in Korea’s technology heavyweights.
- Additional pressure came after reports that China was ramping up its domestic chipmaking capabilities. According to a Reuters report, a Chinese state-backed company has begun producing immersion deep ultraviolet (DUV) lithography equipment, raising concerns about intensifying competition for Korean semiconductor manufacturers.
- Investor sentiment weakened further after SK Hynix reported record quarterly revenue but missed analysts’ consensus estimates, triggering a sharp de-rating in the stock. As a result, SK Hynix’s US-listed American Depositary Receipts (ADRs) fell to a record low, dropping below their initial offering price and fuelling a broader global sell-off in semiconductor stocks.
By late July, KOSPI had fallen roughly 30 per cent from its June record high, wiping out a substantial portion of the AI-driven gains accumulated earlier in the year.
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Photo: ET Now DigitalKOSPI 2026 (Image: AI/ET Now)
Why did KOSPI rebound on July 31?
The sharp rebound on July 31 was primarily driven by stronger-than-expected earnings from major US technology companies, led by Microsoft’s quarterly results, which reassured investors that heavy AI spending is beginning to generate returns.
The earnings revived confidence in AI-related investments globally and triggered a broad rebound in semiconductor stocks, lifting heavyweight Korean chipmakers such as Samsung Electronics and SK Hynix and, in turn, the broader KOSPI index.
What do experts say?
Punita Kumar Sinha of Pacific Paradigm Advisors told ET Now earlier this week that the recent sell-off in AI-linked stocks such as SK Hynix reflects a reality check on valuations, as investors increasingly question whether massive AI-related capital expenditure will generate returns that justify elevated share prices.
“I think the realization, the hype is now setting into a reality check. Because there was a lot of hype on the AI trade… and I think all of those are causing concern on the valuations and this reversal of the AI trade.”
Meanwhile, Matt Maley, Chief Market Strategist at Miller Tabak, said the sharp rebound in South Korean equities may reflect the easing of forced selling rather than the beginning of a sustained recovery.
“When you get those margin calls and things that cause people to sell at any price, once that subsides, it gives the market an air pocket.”
Maley added that such conditions often lead to “these kinds of big bounces,” but cautioned that sharp recoveries following the bursting of a market bubble can often prove temporary.
“We’re going to have to see more upside follow-through,” he said, adding that it will be important for South Korean markets to “hold their recent lows”.
(Disclaimer: The above article is meant for informational purposes only and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
