South Korean equities rallied sharply on Tuesday as investors returned to artificial intelligence (AI) stocks following a prolonged selloff, with semiconductor giants Samsung Electronics and SK Hynix leading the recovery.
The benchmark Kospi index jumped more than 5% in early trading, while both chipmakers gained over 5%, tracking advances in US semiconductor stocks on Monday.
Investor sentiment also improved after crude oil prices declined following US President Donald Trump's indication that further military strikes against Iran were unnecessary for now.
The launch of new AI models by Anthropic ahead of its anticipated stock market debut provided additional support.
The rebound follows a steep correction in South Korean equities, which had previously benefited from strong investor interest in AI-related companies.
The Kospi has fallen more than 40% from its summer peak, compared with a decline of approximately 16% in Taiwan's benchmark index from its recent record.
On Monday, the Korean index closed at its lowest level since early February amid concerns about AI financing and the political outlook in the US.
Samsung and SK Hynix were trading at less than three times their estimated forward earnings.
Jung In Yun, chief executive officer of Fibonacci Asset Management Global, said investors were shifting their attention towards underlying semiconductor demand and earnings prospects.
He suggested that Korean equities had experienced a disproportionately severe correction compared with markets in Taiwan and Japan.
The recovery came despite controversy surrounding Nvidia Chief Executive Officer Jensen Huang, which had weighed on sentiment towards the US chipmaker.
Investors were also monitoring Anthropic's planned initial public offering (IPO) marketing, scheduled to begin Tuesday.
Nvidia's upcoming earnings announcement next week remained another important event for the AI investment theme.
Market participants continued assessing whether improving semiconductor demand, stronger US technology stocks and lower energy prices could support a sustained recovery in South Korean equities.
However, uncertainty surrounding AI financing and broader market conditions remained a concern.
