Kospi Index jumped by over 4% on Wednesday as companies in the memory industry bounced back. It rose to 5,772 points, up modestly from this week’s low of 5,465, mirroring what happened in the United States where the Dow Jones, Nasdaq 100, and S&P 500 soared.
Samsung Electronics and SK Hynix soar as Ken Griffin warns
The Kospi Index jumped by over 4% on Wednesday as global stocks bounced back. In the United States, the Dow Jones jumped by 530 points, while the S&P 500 Index was up by 25 points.
The same trend is happening in other Asian countries, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng rising modestly.
US stocks jumped as bond yields and crude oil prices dropped amid hopes of a potential US and Iran deal to end the war. This retreat reversed on Wednesday, with Brent trading at $110 and the West Texas Intermediate (WTI) hitting $100.
The biggest South Korean stocks are in the green. Samsung Electronics jumped by 7.3%, while SK Hynix and SK Square jumped by 8% and 7%, respectively. This rebound coincided with the rally in memory and AI companies in the US, with Dell and Nvidia soaring by over 2%.
Still, concerns about the AI industry remains. In a statement, billionaire Ken Griffin said that the AI industry was certainly in a bubble right now. His statement is notable because Ken runs one of the biggest and most successful hedge funds in the world. He also runs one of the top market makers in the country.
Billionaire Ray Dalio, who founded one of the top hedge funds, has also warned that the AI bubble will burst . The AI Stock Bubble Index has jumped to over 70. A burst in the AI bubble would negatively impact Kospi since its biggest constituents are in the industry.
South Korea’s PPI and BoK interest rate decision
The Kospi Index also jumped after South Korea released the latest producer price index (PPI) data. The numbers showed that the headline PPI softened from 7.9% in October to 7.7% in September, which is an encouraging sign.
This report came a day before the Bank of Korea (BoK) releases its interest rate decision. A Reuters poll found that most economists expect the bank will leave interest rates unchanged at 3% as it assess ythe impact of the last back-to-back hikes. In a note, a BNP Paribas analyst said:
“The risks are tilted to the upside, given that growth is very strong on the back of semiconductors. This strong growth will spread into the domestic sector and domestic demand, (leading) to inflationary pressures.”
Kospi Index technical analysis
Kospi Index chart | Source: TradingView
The daily chart shows that the Kospi Index has remained under pressure in the past few days. It was trading at 5,755, a few points above the crucial support level of 5,272.
On the negative side, it remains below the 50-day moving average and is forming a small bearish flag pattern. These technicals suggest that the index may resume the downward trend, potentially to 5,272 points soon.
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