South Korea’s stock market experienced an unprecedented swing on July 31, 2026, with its benchmark Kospi index surging 14%, marking the largest one-day gain in its history. This sharp reversal followed weeks of volatility driven by concerns over an AI-driven tech bubble and global sell-offs. The rebound was highlighted by significant rallies in key tech stocks such as Samsung Electronics and SK Hynix, which also saw record recoveries. Market observers described the fluctuations as “bipolar,” with investor sentiment flipping rapidly between panic and euphoria.

The recovery was largely fueled by a strong overnight rally in U.S. technology shares, led by positive quarterly earnings from giants including Microsoft, Amazon, and Meta. These results reinforced expectations that investment in artificial intelligence infrastructure remains robust despite recent market jitters. Additionally, SK Group Chairman Chey Tae-won’s disclosed purchases of SK Hynix shares boosted confidence in the company, helping to stabilize the local tech sector. Analysts noted that foreign investors played a significant role in driving the surge, supported by short-covering and ETF rebalancing activities, particularly after new cash-deposit rules for leveraged ETF investors took effect on the same day.

Despite this dramatic bounce, sentiment among market experts remains cautious. Jung In Yun of Fibonacci Asset Management suggested that while the rebound may have further momentum due to oversold positions and strong AI fundamentals in SK Hynix, the ongoing durability of the rally depends on sustained foreign buying after short-covering subsides. Semiconductor analyst Rolf Bulk pointed to the underlying demand for AI infrastructure build-out as a positive factor but acknowledged that recent volatility stemmed from forced liquidations and stretched valuations, not from a fundamental shift in the sector’s outlook.

There are concerns that these swings could continue, with some experts warning that the market remains fragile due to heavy leverage and investor uncertainty. Paul Gambles of MBMG Family Office Group highlighted that the market’s disconnect from asset prices and high leverage might lead to further wild moves or even a larger correction down the line. For now, market watchers are closely monitoring foreign fund flows to gauge if this rebound signals the start of a sustainable recovery or merely another episode of volatile trading in one of the world’s most unstable equity markets.