[Deep Dive] KOSPI Surges 4.4% alongside Sidecar Activation: Bull Market Triggered by Foreign Net Buying and Semiconductor Rally

On July 23, 2026, the South Korean stock market experienced a rare and powerful rebound. The KOSPI index closed with a 4.4% gain compared to the previous trading day. Simultaneously, the KOSDAQ market surged over 5%, triggering a buy sidecar that temporarily suspended program trading bids. This strong rally was primarily driven by massive net buying from foreign investors and an explosive rebound in the semiconductor sector.

Massive Inflow of Foreign Capital and KOSPI's 4.4% Surge

Investor sentiment, which had recently contracted due to macroeconomic uncertainties and escalating geopolitical tensions in the Middle East, recovered rapidly as foreign investors initiated large-scale bargain hunting. Aggressive net buying by foreign investors in the KOSPI market spearheaded the index's ascent. This is interpreted as a result of attractive valuations following short-term declines, coupled with a reassessment of the resilient earnings capacity of major export-driven companies.

• Improved Supply and Demand: Foreign investors absorbed profit-taking volumes from institutional and retail investors, forming a solid support level.
• Currency Stabilization: As the recently volatile exchange rate entered a stabilization phase, concerns over foreign capital outflows eased, positively affecting the supply-demand dynamics.

Alphabet's Earnings Tailwind and the Semiconductor Rally

The core engine of this market rebound was the semiconductor sector. South Korea's tech bellwethers, including Samsung Electronics and SK Hynix, rallied concurrently, accounting for a significant portion of the KOSPI's gains. The catalyst behind this semiconductor rally was the earnings announcement and large-scale capital expenditure (CAPEX) plans of global big tech giant Alphabet.

Alphabet unveiled plans for massive AI infrastructure and facility investments in 2026. Projections that astronomical funds will be injected into expanding cloud infrastructure amidst intensifying global AI competition translated into market confidence regarding surging demand for High Bandwidth Memory (HBM) and server DRAM. Consequently, earnings expectations for domestic semiconductor firms—key players in the AI hardware value chain—were heavily priced in.

KOSDAQ Buy Sidecar Activation: A Sharp Reversal in Sentiment

The amplified volatility in the KOSDAQ market manifested in the extreme form of a buy sidecar activation. As the index surged over 5% intraday, the effect of program trading bids was suspended for five minutes. This serves as a prime indicator of how rapidly and forcefully buying sentiment permeated the market.

In the KOSDAQ market, broad-based buying was observed not only in semiconductor materials, parts, and equipment companies but also across the healthcare and secondary battery sectors. In particular, news of Alphabet's expanded AI investments strongly propelled the stock prices of small and medium-sized AI and data center-related firms listed on the KOSDAQ.

Future Market Outlook and Key Variables

For the current bull market to solidify into a sustained trend, several macroeconomic indicators and policy variables must be confirmed.

• U.S. Tech Earnings: It remains to be seen whether the downward pressure on U.S. equities, triggered by Tesla's poor performance, can be offset by the earnings of other Magnificent Seven (M7) companies.
• ECB and Fed Monetary Policies: The possibility of a September rate cut by the European Central Bank (ECB) and the Federal Reserve's monetary policy stance are key variables determining global liquidity flows.
• Volatility in DeFi and Crypto Assets: The potential for risks in the crypto market—such as serial DeFi hacks and the impending closure of BitMEX—to spill over into traditional financial markets requires continuous monitoring.

Rather than remaining complacent with short-term rebounds, an approach that prioritizes risk management through rigorous analysis of fundamentals and supply-demand trends is currently validated.