South Korean stocks extended their winning streak on Friday, with the benchmark KOSPI rising 2.4% in early trading and heading for a weekly gain of roughly 8%. The rally was led by the country's two semiconductor giants, Samsung Electronics and SK Hynix, as foreign investors continued to pile into the market.
The move comes even as traders digest headlines around US chip giant Nvidia, which have rattled AI-related stocks elsewhere. But Korean investors appear to be treating the Nvidia news as company-specific noise rather than a signal about the broader AI trade.
Why Korean chips are shrugging off Nvidia
At the heart of the rally is demand for high-bandwidth memory (HBM), a type of ultra-fast chip used in advanced AI servers. Samsung and SK Hynix are two of the world's leading producers of HBM, and investors see them as direct beneficiaries of the AI boom, regardless of what happens at Nvidia specifically.
“The market is looking through the Nvidia headlines and focusing on the structural demand for AI memory,” said one Seoul-based trader. “The order books for HBM are strong, and that's what matters for these companies.”
This week's gains echo a similar pattern in other Asian markets, where chip stocks have rebounded after an initial selloff. In Japan, the Nikkei posted its best week in five months as chip stocks recovered, a sign that investors are willing to look past single-company news.
Foreign buying lifts the market and the won
A key driver of the KOSPI's strength has been sustained foreign buying. Overseas investors were net buyers for a fourth straight session, picking up 161.0 billion won (about $121 million) of Korean shares on Friday.
When foreign investors buy Korean stocks, they typically need to convert their currency into won to settle trades. That demand for won has helped push the currency stronger, with the dollar falling to 1,331.6 won, its firmest level in weeks.
The currency move comes even as local bond yields rose, with the 3-year yield at 3.772% and the 10-year at 4.016%. That combination—a stronger won and higher yields—is a reminder that equity inflows can coexist with tighter rate expectations, as investors weigh both the growth outlook and inflation risks.
What it means for investors
For everyday investors, the rally is a positive sign that the AI trade remains intact, even when headline risks emerge. But the foreign buying is a two-sided story for an export-led economy like South Korea's.
In the near term, steady overseas buying can push up large index names like Samsung and SK Hynix simply through demand for their shares. That's been evident this week, with both stocks posting strong gains.
However, if those inflows keep the won stronger for longer, the same exporters could face a quieter headwind. Many Korean companies earn their revenue in dollars, and a firmer won means each dollar of sales converts into fewer won when results are reported at home. So while foreign demand gives the market a boost, the currency move can chip away at the won value of overseas profits.
This dynamic is not unique to South Korea. In other markets, foreign buying has also provided support. For example, foreign buying has cushioned Indian stocks even as oil prices and inflation pressures mount. And in Japan, chip stocks have rebounded on similar AI optimism.
Looking ahead
Investors will be watching whether foreign buying continues in the coming weeks, and whether the won's strength starts to weigh on export earnings. The KOSPI's weekly gain of 8% is a sharp move, and some analysts caution that the market could be due for a pause.
Still, the underlying demand for AI memory remains strong, and both Samsung and SK Hynix are well-positioned to benefit. For now, the market is choosing to focus on that, rather than the noise around Nvidia.
As always, it's worth remembering that markets can turn quickly, and a strong week doesn't guarantee future gains. But for investors with a long-term view, the AI-driven demand for memory chips looks like a trend that could persist.
