Seoul pauses program buying after KOSPI surges 4.5% ahead of earnings

The KOSPI in South Korea climbed 4.53% from Monday's close to 5,717.30 on Tuesday morning. That increase triggered a five-minute halt on program buying by the Korea Exchange, the second such brake within six days.

The earlier brake on October 21 proved temporary; the KOSPI surrendered all gains from that rally in just two trading sessions. For current KOSPI investors, this latest rebound depends on SK Hynix and Samsung Electronics, both reporting earnings this week.

Memory Stocks Carried the Rally While Oil Gave a Small Push

According to Yonhap, the Korea Exchange applied the buying-side sidecar at 10:13 a.m. The improvement in investor mood followed a rebound in US AI stocks after the previous session.

On Monday, chip stocks drove US market gains. The Philadelphia Semiconductor Index advanced 2.82%, the Nasdaq Composite increased 0.82% to 26,169.38, and the S&P 500 added 0.70% to 7,676.77.

Brent crude declined as officials from Saudi Arabia, Pakistan, and Turkey conducted talks in Tehran. Early Tuesday, it traded at $114.64 per barrel, a 1.01% drop on the day. Despite the fall, Brent is still up 17.28% compared to a month ago.

In Seoul, the memory sector leaders spearheaded the advance. As of 10:35 a.m., SK Hynix had risen 7.14% to 1.366 million won, while Samsung gained 4.93% to 223,500 won.

South Korea's outperformance exceeded the gains seen elsewhere in Asia on Tuesday. Japan's Nikkei 225 climbed 1.96% to 63,407.69, and Taiwan's TAIEX increased 0.47% to 46,260.03.

On October 15, the pattern reversed: the KOSPI plunged 7.57% following strong US inflation figures, while the Nikkei and TAIEX dropped 4.90% and 3.41%, respectively. Because of its heavy weighting in two memory chip producers, the KOSPI exaggerates AI-driven moves in either direction.

Two Earnings Calls Stand Between This Rally and a Repeat

The recovery begins from a significant deficit after several weeks of selling led by chip stocks. On Monday, the KOSPI closed nearly 40% below its June high. Foreign investors were net sellers of 695.5 billion won that session.

On Sunday, Goldman Sachs lowered its KOSPI target to 9,000 from 12,000. The bank notes that current chip valuations suggest a 65% decline in 2027 sector earnings, a scenario it views as excessively pessimistic.

SK Hynix is set to announce third-quarter results on October 28, with Samsung following on October 29. Memory chip manufacturers account for roughly half of the index composition.

Retail investors are still vulnerable to the earnings outcome. According to Global Markets Investor, their net purchases in 2026 have an estimated average entry price of around 6,550. Tuesday morning's level is approximately 13% lower than that.

Strong guidance on memory pricing for 2027 would back Goldman's thesis. Conversely, weak projections would maintain the priced-in expectation of a 65% earnings drop, and Tuesday's advances could then dissipate similarly to the October 21 rally.