During trading, a surge of 2000 points! What happened in the Japanese and Korean stock markets?

Japan and South Korea Stock Markets Experience Collective Surge!

On the afternoon of February 3rd, the Japanese and South Korean stock markets continued their upward trend. The Nikkei 225 index surged by 2,000 points intraday, with an increase of over 4%, reaching a new all-time high; the Korea Composite Stock Price Index (KOSPI) also rose by more than 6%, fully recovering from yesterday’s decline.

Semiconductor chip stocks all gained strength. As of the time of this report from Securities China, SK Hynix and Samsung Electronics both rose by over 8%, Amphenol Testing increased by over 7%, Hanmi Semiconductor rose by more than 6%, and Tokyo Electron gained over 5%.

Japan’s Stock Market Rises by 2,000 Points

On Tuesday, Japan’s stock market surged sharply, with the Nikkei 225 index rising by over 4% intraday, and the Topix index increasing by more than 3%. As of this report from Securities China, the Nikkei 225 index rose by over 2,000 points, up 3.86%, and the Topix index increased by 3.09%.

On the news front, Japanese Finance Minister Shunichi Suzuki stated on February 3rd that Prime Minister Fumio Kishida did not overemphasize the benefits of yen depreciation last weekend. This move hints that Suzuki is trying to maintain market vigilance regarding government intervention risks.

Suzuki said, “Fumio Kishida simply responded to the yen exchange rate in a textbook manner and did not particularly emphasize the benefits of a weak yen.” She added that she agrees with Kishida’s stance that yen depreciation has both pros and cons.

Suzuki also emphasized that Japan will continue to coordinate closely with the United States, implying that both sides may take joint action in the market. She stated, “Japan and the U.S. have been coordinating, including at my level and among senior officials in monetary policy. We reached a joint statement in September last year, so we will continue to coordinate according to that agreement and take appropriate measures.”

Before making these remarks, Prime Minister Kishida had said at a campaign rally last week that a weak yen could bring significant opportunities for export-oriented industries, which cooled speculation about her government intervening in the yen exchange rate. The yen again fell back to around 155 on Monday, and early Tuesday hovered around 155.50.

Kishida also stated that yen depreciation benefits Japan’s foreign exchange reserve accounts, which the government uses for various purposes, including currency intervention. Later, she posted on X that her intention was to emphasize the need to build an economy capable of resisting exchange rate fluctuations, apparently to quell outside speculation that she was downplaying the recent yen weakness.

As the February 8th Japanese House of Representatives election approaches, traders are preparing for increased market volatility. They bet that the Liberal Democratic Party led by Kishida might win a landslide victory. Such a result could pave the way for more aggressive fiscal policies, potentially boosting inflation and putting pressure on the yen and Japanese government bonds.

South Korea’s Stock Market Rises Sharply, Chip Stocks Explode

On February 3rd, South Korea’s stock market also experienced a major rally. The KOSPI surged by over 6% intraday, with Samsung Electronics rising by over 10%, marking the largest gain since March 2020. As of this report from Securities China, the KOSPI increased by 5.87%, Samsung Electronics rose by over 9%, SK Hynix gained over 8%, and Hanmi Semiconductor increased by more than 6%.

The rebound in South Korea’s stock market on Tuesday was mainly driven by domestic institutional investors, with foreign investors also net buying stocks. Vice Finance Minister Lee Hyeong-yi stated on Tuesday that the South Korean government has “sufficient policy capacity” to respond to any external uncertainties. He also said that, given the apparent increase in volatility in the currency markets, the government will closely monitor financial market developments.

Analysts from JPMorgan Chase predict that the Korea Composite Stock Price Index (KOSPI), which broke through 5,000 points in January, could reach 7,500 by 2026. They set a baseline scenario target of 6,000 points for this year, with an optimistic scenario target of 7,500.

In a report, JPMorgan Chase stated that driven by rising chip prices, leading stocks like Samsung Electronics and SK Hynix have led the gains in the KOSPI, and that chip prices may continue to rise until the end of 2027. They believe these two stocks still have 45%-50% upside potential in 2026. JPMorgan Chase also expects earnings per share in other non-memory industrial sectors to grow by about 20%. Ongoing corporate governance, market, and tax reforms in South Korea are expected to serve as additional catalysts.

Another analysis pointed out that the sharp rise in Samsung Electronics and SK Hynix reminds investors that the AI investment boom has shifted toward infrastructure sectors, benefiting South Korean chip manufacturers at the core of the industry supply chain.

South Korea has positioned itself as a key supplier for global industry leaders like Nvidia. Franklin Templeton Global Investment Portfolio Manager Yiping Liao said, “South Korea’s high concentration in specific segments of the tech supply chain, such as SK Hynix and Samsung Electronics, seems to be due to an unprecedented cycle of storage chip shortages.”

Simon Woo, head of Korea research at Bank of America Global Research based in Seoul, predicts that the super cycle for storage chips will continue until 2027. He stated, “Storage chips have become a critical strategic asset for U.S. tech giants, which is a stark contrast to earlier cycles when memory was seen merely as a disposable component for PCs and smartphones. This shift has elevated the status of the storage industry.”

Goldman Sachs’ Asia-Pacific stock chief strategist Timothy Moe estimates that this year, the semiconductor industry will contribute about 60% of the expected profit growth for Korean stocks.