South Korea’s benchmark KOSPI index endured one of the most turbulent weeks in its history, vacillating violently around the psychological 5,000-point threshold. What began with a panic-driven sell-off on Monday transformed into a euphoric but short-lived rally, only to succumb to renewed profit-taking by Friday. The extreme price action highlights the market’s heightened sensitivity to global macroeconomic signals and the fragility of the current AI-driven bull run.

A Week of Whiplash: From “Black Monday” to Record Highs

The week opened with a shock to the system as the KOSPI plummeted over 5% on Monday, Feb 2, triggering a sell-side circuit breaker. Investors fled risk assets amid fears of a hawkish shift in US monetary policy—dubbed the “Warsh shock”—and concerns over overheated valuations. However, the sentiment reversed dramatically on Tuesday. In a textbook “V-shaped” recovery, the index surged 6.84%, erasing the previous day’s losses and reclaiming the 5,000 level. This momentum carried into Wednesday, pushing the index to an all-time intraday high of 5,376.92, fueled by institutional buying and a temporary easing of global rate fears.

Tech Sector Sensitivity and Foreign Flows

The week’s volatility was inextricably linked to the performance of South Korea’s semiconductor giants. Samsung Electronics and SK Hynix served as proxies for global sentiment regarding Artificial Intelligence (AI). While mid-week buying was driven by “bargain hunting” after the initial drop, the mood soured again by Thursday and Friday. Renewed anxieties over excessive AI capital spending by US Big Tech firms weighed heavily on the sector. Foreign investors, who had briefly returned mid-week, resumed net selling by Friday, offloading over 3.3 trillion won worth of shares and dampening the recovery.

Macro Context: The 5,000 Point Battleground

The inability of the KOSPI to hold the 5,300 level signals that the market is still searching for a stable floor. The oscillation around 5,000 suggests that while the “Korea Discount” may be fading, valuations are being strictly tested against global liquidity conditions. The Korean won also showed instability, weakening against the dollar late in the week, which further pressured foreign inflows. The market is currently caught in a tug-of-war between strong corporate fundamentals—driven by the memory chip cycle—and the external headwinds of US monetary policy uncertainty.

Looking ahead, investors should brace for continued volatility as the market attempts to consolidate near the 5,000 line. The immediate focus will shift to the upcoming US Consumer Price Index (CPI) data and further earnings guidance from global tech leaders, which will likely dictate the direction of foreign capital flows in Seoul. While the long-term structural bull case for Korean semiconductors remains intact, the short-term outlook requires caution. A decisive break below 4,900 could signal a deeper correction, whereas stabilizing above 5,100 would be necessary to restore confidence in the rally.