South Korean shares hit one-week closing high on AI frenzy, cheaper oil

South Korean shares posted a one-week closing high on Wednesday as heavyweight chipmakers rallied on robust U.S. earnings and evidence of massive AI capital spending, while easing oil prices alleviated inflation worries.

The benchmark KOSPI index finished 3.8% higher at 6,598.26, its highest close since July 27. The junior Kosdaq index rose 2.4% to a three-week closing high.

Overnight, U.S. stocks notched a record close on solid earnings from AI-related companies, with massive spending flagged by SpaceX lifting chip stocks. The Philadelphia Semiconductor index shot up 6.6%.

South Korean memory chipmakers Samsung Electronics and SK Hynix gained 2.9% and 6.7%, respectively. The two stocks account for more than half of the KOSPI index.

Subdued trading in leveraged single-stock ETFs tied to chipmakers has tempered the sharp market volatility seen in recent weeks. The KOSPI shed almost 40% in roughly five weeks through late July, but is still up 57% year-to-date.

“The unwinding of single-stock leveraged ETFs over recent weeks appears to have eased some of the technical pressure, allowing fundamentals to regain greater influence,” said James Ooi, market strategist at Tiger Brokers.

“While the KOSPI’s valuation has become more attractive following the sharp correction since May… Selling pressure appears to be easing, but deleveraging in memory-related stocks is still ongoing and could keep volatility elevated.”

Hyundai Motor and sister automaker Kia Corp were up 3.1% and 2.6%, respectively. Steelmaker POSCO Holdings climbed 1.3%, while drugmaker Samsung BioLogics rose 1%.

The won appreciated for a third straight day, rising as far as 1,420.8 per U.S. dollar on the onshore settlement platform. The currency has risen almost 1% over the past three sessions.

Minutes of the Bank of Korea’s July meeting showed policymakers saw a need for further tightening, though the timing and pace of future rate hikes will depend on incoming data.

Markets are pricing in a near 70% chance of a 25-basis-point hike ahead of the next central bank policy meeting scheduled for later this month.

Foreigners were net buyers of shares worth 1,446.3 billion won ($1.02 billion) on Wednesday, after offloading 9.862 trillion won in July, according to exchange data.

In money and debt markets, September futures on three-year treasury bonds gained 0.24 point to 103.57.

The most liquid three-year Korean treasury bond yield fell by 7.7 basis points to 3.665%, while the benchmark 10-year yield fell by 10.1 basis points to 4.148%.