KOSPI surges 17% on record foreign buying; experts warn of 'dead cat bounce'

Huo Xing Finance reports that on July 31, after a prolonged period of weakness throughout July, South Korea’s KOSPI index surged more than 17% intraday, marking its largest single-day gain in history. Although some investors view this rebound as a “signal flare” indicating a reversal in market trend, market experts argue that the episode once again confirms the fragility of South Korea’s stock market, which is highly susceptible to foreign capital flows and volatile swings—this rally may ultimately prove to be merely a “dead cat bounce.” Data shows that within just over two minutes after market open, foreign investors’ net purchases of Korean stocks reached 1.6 trillion KRW; by closing, their total net buying for the day hit 7.18 trillion KRW, a record high. Meanwhile, South Korean retail investors recorded net sales of 8.2 trillion KRW—the highest single-day net selling on record. Analyst Lee Chae-won stated: “It is currently difficult to determine whether this rebound is a temporary technical recovery or the beginning of an upward trend.” “Ultimately, the key lies in the semiconductor cycle. Given market skepticism over whether high operating profit margins can be sustained, investors should focus over the next six months on whether semiconductor supply bottlenecks will persist beyond 2028.” A representative from the asset management industry added: “Retail investors trapped at current highs are likely to sell to lock in profits when the index approaches its previous highs around 8,000 to 9,000 points, thereby suppressing further upward momentum.”