Kospi surges in record rebound as AI chip stocks rally across Asia

Asian markets staged one of their most dramatic recoveries in years on Friday, July 31, as investors rushed back into semiconductor and artificial intelligence stocks after blockbuster earnings from U.S. tech giants eased fears over the sustainability of AI infrastructure spending.

South Korea's Kospi soared more than 14%, rebounding from a three-day rout, while Japan's Nikkei 225 surged roughly 5%, driven by sharp gains in chipmakers and AI-related names. The rally followed Wall Street's strongest session for semiconductor stocks in over a year, with the PHLX Semiconductor Sector index leaping 8% on Thursday.ndtvprofit+2

Earnings Spark the Reversal

The catalyst was a wave of reassuring results from major U.S. technology companies. Microsoft ↗ 0.52% surged 16% on Thursday, adding roughly $450 billion in market value — the most by any stock in a single day — after delivering cloud-computing forecasts that eased concerns about returns on massive AI capital expenditure. Amazon Amazon.com, Inc. ↘ 2.24% jumped 9% after reporting accelerating cloud revenue for a fifth straight quarter.economictimes+1

"The AI demand story didn't really decelerate, it seems like it's still sustainable. So the selloff that we saw… is maybe the market overreacting to some of those concerns around capex spending," said Fabien Yip, a market analyst at IG.reuters

South Korea Leads the Charge

South Korean chipmakers led the regional rally. SK Hynix ↘ 3.12% surged more than 25%, putting it on track for its best trading day on record, while Samsung Electronics rallied over 20%. Despite Friday's rebound, the Kospi remained on track for a 24% decline in July, which would mark its worst monthly performance since 1997.ndtvprofit+1

In Japan, chip-testing equipment maker Advantest climbed nearly 18%, while Tokyo Electron gained around 9% after reporting strong April-June quarter earnings. SoftBank Group jumped more than 9%.thestar+1

BOJ Decision and Yen Intervention Add Complexity

Investors were also watching the Bank of Japan's monetary policy decision later Friday. The central bank was widely expected to hold its benchmark rate steady at 1% after last month's hike to the highest level in 31 years. Meanwhile, the yen traded at around 160.51 per dollar after Japanese authorities intervened on Thursday to haul the currency away from 40-year lows, sending it up as much as 2.4% in a single session.businesstimes+2

"The timing is no coincidence. Clearly the authorities are pre-emptively warning or insuring against JPY selloff on an expected BOJ hold," said Vishnu Varathan, head of APAC macro strategy at Mizuho.reuters

Despite the sharp rebound, some analysts cautioned that sentiment remains fragile. "The market performance has been narrow in Asia ex-Japan, mostly related to AI," said Ji Young Park, senior emerging-market equity portfolio manager at Amundi. "Given the sharp correction we've had across the markets that have AI exposure, we believe we are close to the end of this prolonged volatility."reuters