South Korea's KOSPI surged approximately 15% to 6,376.68 by midday Friday, recouping much of the ground lost during a bruising three-day semiconductor selloff. The benchmark index had climbed as much as 16.8% to an intraday high of 6,531.71 before paring back a portion of those gains later in the session.

Samsung Electronics rose roughly 21%, while SK Hynix advanced 24.6%. Both semiconductor giants had posted even steeper gains shortly after the opening bell, with Samsung hitting 22.5% and SK Hynix surging as much as 27.7%. Together, the two firms dominate global memory-chip production, controlling a combined share of over 60% of the worldwide DRAM market, which makes their share-price movements a bellwether for the broader chip cycle. The rebound was bolstered by a strong technology session on Wall Street and renewed investor confidence in artificial intelligence spending, following earnings reports from Microsoft and other major U.S. firms that pointed to expanding cloud and data-center demand.

Government Creates 20 Trillion Won Strategic Fund

South Korea will establish a strategic sovereign wealth fund with initial capital of at least 20 trillion won, approximately $13.9 billion. The fund will be housed within a dedicated investment account at the Korea Investment Corporation, the country's existing sovereign wealth manager established in 2005 to manage overseas foreign-exchange reserves, and is authorized to invest across a range of strategic sectors, including AI, semiconductors, robotics, defense, aerospace, biotechnology, nuclear power, and quantum technology.

The program may also finance data centers, energy clusters, and overseas companies that support Korean industrial supply chains. The government intends to contribute approximately 16 trillion won in shares currently held by public financial institutions, along with an additional 4 trillion won in shares received through inheritance and gift-tax payments.

The initiative arrives amid a broader wave of state-backed technology investment across major economies, including the U.S. CHIPS Act, the European Chips Act, and Japan's semiconductor revitalization strategy, as governments compete for supply-chain resilience in critical technologies. The policy announcement added domestic momentum to a rebound already building across Asian chip markets. Japan's Nikkei gained more than 4%, as semiconductor and AI infrastructure stocks recovered from losses driven by fears of Chinese competition and doubts about the durability of global technology spending.

Samsung and SK Hynix Reverse Three-Day Rout

Friday's rally came on the heels of an 8% KOSPI decline that had pushed the index toward its largest July loss on record. That session followed a separate near-10% collapse severe enough to trigger a 20-minute market-wide trading halt.

Altogether, the selloff erased nearly 40% of the index's value from its June peak and wiped out more than $2 trillion from South Korean equities at its deepest point. Samsung and SK Hynix, which together account for over half of the benchmark's weighting, amplified both the downward slide and Friday's sharp recovery.

Leveraged Investors Remain Deeply Exposed

The market reversal forced widespread liquidations among retail traders using margin accounts and single-stock leveraged exchange-traded products. An estimated 360,000 South Korean margin accounts were fully liquidated, while more than 1.2 million accounts reportedly received margin calls.

Assets in leveraged products heavily tied to Samsung and SK Hynix plummeted from approximately $50 billion to between $16 billion and $17 billion during the rout. Regulators have halted new sales of certain products and are preparing higher deposit requirements along with stricter investor exposure limits.

The government plans to submit amendments to the Korea Investment Corporation Act in August, seek passage through the National Assembly before year-end, and launch the strategic fund in 2027.