AI-driven chip demand, tight supply and export strength are seen supporting South Korean equities despite a sharp KOSPI selloff, foreign net selling and volatility tied to leveraged AI-related positions.
Bank of Korea Governor Shin Hyun-song said a semiconductor upcycle should continue for the time being and help limit downside pressure on South Korean equities, even as the KOSPI has suffered sharp volatility amid foreign net selling, concerns over slower AI investment and the unwinding of leveraged positions tied to AI-related stocks. In a July 29 report to the National Assembly’s Strategy and Finance Committee, Shin said expanding AI adoption, major tech investment and supply constraints in advanced chip manufacturing should keep the global semiconductor cycle favorable for a considerable period. That view aligns with a Reuters poll of 15 economists showing South Korea’s exports likely rose 59.0% in July from a year earlier after a 70.7% jump in June, with early-July data showing semiconductor shipments up 180.6%, although economists said much of the increase reflects higher chip prices rather than comparable shipment-volume growth.