South Korea’s stock market staged a vigorous rebound on Wednesday, recovering from a dramatic sell-off, as a powerful resurgence in technology shares provided a much-needed boost. However, the mood in Tokyo remained subdued, with the market constrained by a persistently weak yen hovering near multi-decade lows against the US dollar.
Asian equities were taking a divergent breath after the previous day’s plunge, which had been triggered by a synchronized slump in global technology stocks mirroring a sharp downturn on Wall Street.
Kospi Surges on Bargain Hunting in Chip Giants
In Seoul, the benchmark Kospi index erased a significant portion of Tuesday’s losses. After collapsing by 10%, the index climbed 3.26% to 8,471 points by 02:15 GMT. The recovery was spearheaded by a robust rebound in memory chip titans, with Samsung Electronics soaring 6.12% and SK hynix gaining 3.05%. Both stocks had plummeted around 12% just a day earlier.
“Today’s rebound in Seoul highlights the resilience accumulated by the South Korean domestic market, driven by a pool of opportunistic investors eager to buy on any dip,” said Hebe Chen, an analyst at Vantage, in a note cited by Bloomberg. These investors are betting on a continued uptrend in tech valuations. However, Chen cautioned that prudence remains essential “as the first cracks have appeared in the bullish momentum of the global tech sector,” exposing Seoul to a “more chaotic trajectory” that is increasingly sensitive to sector-specific news.
Tokyo’s Relief Proves Fragile Amid Selling Pressure
At the Tokyo Stock Exchange, the respite was far more delicate. Following a drop of over 3% on Tuesday, the flagship Nikkei index barely stabilized, inching down 0.15% to 69,664 points. Analysts from Tokai Tokyo Intelligence noted that the Nikkei’s proximity to its historical highs is likely to exert selling pressure on semiconductor-related shares, which have registered substantial gains so far and are therefore prime targets for profit-taking.
The Yen Remains Under Close Watch
“The yen has recently fallen as markets fear the Bank of Japan will not raise interest rates quickly enough to control inflation. Rising oil prices are also weighing on the,” by inflating Japan’s hydrocarbon import bill, summarized analysts at Standard Chartered. The recent slide has been fueled by a strengthening dollar, as the potential for further interest rate hikes by the US Federal Reserve comes into sharper focus following its monetary policy meeting last week. The widening interest rate differential between the Bank of Japan and the Federal Reserve tends to boost the dollar and intensify pressure on the yen, making the latter comparatively less rewarding to hold.
This dynamic is fueling speculation about a possible new intervention from Tokyo. The Japanese government had already spent approximately 11,700 billion yen (63 billion euros) in May to prop up its currency, an effort that had only a very fleeting impact. Meanwhile, gold prices continued to slide, falling 1% to $4,075 an ounce, as a firmer dollar and rising real yields weigh on the non-yielding asset.
