Following a volatile period triggered by the U.S. midterm elections, South Korea's benchmark KOSPI has staged a dramatic rebound, soaring past the 5,200 threshold fueled by a powerful rally among heavyweight semiconductor stocks.

According to the Korea Exchange on the 10th, the KOSPI surged 220.28 points (4.39%) to close at 5,239.13, successfully erasing recent losses. The tech-heavy KOSDAQ index followed suit, climbing 28.64 points (4.48%) to finish at 667.61, signaling a broad recovery across both domestic markets. Earlier in the month, the KOSPI peaked at 5,859.08 on November 2 before sliding sharply to 5,648.79 the next day. The downward pressure intensified on November 6 (5,059.69) and November 9 (5,018.85), pushing the index dangerously close to the psychological support level of 5,000.

The day’s massive surge was spearheaded by South Korea's premier semiconductor duo: Samsung Electronics and SK Hynix. Samsung Electronics jumped 4.74% to 198,900 won, while its preferred shares gained 5.37% to 159,000 won. SK Hynix also registered a stellar 6.69% surge, finishing at 1,212,000 won and lifting the entire semiconductor value chain.

Market analysts attribute the rebound to a mixture of oversold sentiment correction and robust corporate fundamentals. While post-election policy uncertainties and global risk-off sentiment had initially triggered heavy institutional and retail sell-offs, market participants quickly recognized that the recent pullback was excessive, drawing aggressive bargain-hunting capital back into the market. Furthermore, experts emphasize that upcoming stellar earnings reports are fundamentally altering investor sentiment.

According to projections from Meritz Securities, the earnings landscape for KOSPI-listed companies is set to enter an entirely new paradigm. While annual operating profits hovered within a 136 trillion to 307 trillion won range between 2019 and 2025, aggregate operating income is forecast to skyrocket past 998 trillion won in 2026. Looking ahead to 2027, operating profits are projected to surge an additional 42.9% year-on-year to 1,426 trillion won, with net income attributable to controlling shareholders expected to expand by 41.4% to reach 1,125 trillion won.

These monumental gains are translating directly into tangible corporate free cash flows. As capital expenditure growth rates are anticipated to trail earnings expansion, the KOSPI’s operating cash flow is projected to climb from 756 trillion won in 2025 to 1,212 trillion won by 2027. Notably, the semiconductor sector—the core catalyst of the current market cycle—is expected to capture roughly 99% of the market consensus upside for KOSPI net income by 2027, cementing its status as the premier sector to watch.

Lee Sang-hyun, an analyst at Meritz Securities, noted, "The baseline profit level of the KOSPI has fundamentally shifted starting in 2026, transforming into a market where real cash is retained. Investors should focus on companies that can boost dividend payouts while retaining surplus cash following earnings growth. Sectors demonstrating genuine shareholder return capacity and undervalued metrics are well-positioned to sustain a long-term upward trajectory."

Nevertheless, some experts advise caution regarding the sustainability of this short-term bounce. Lee Eun-taek, an analyst at KB Securities, cautioned, "At the heart of recent market contractions lies the capital-raising dilemma driven by inflation anxiety. While the recent decline in oil prices has provided a positive impulse, the future trajectory of core inflation remains paramount. We must closely monitor whether core inflationary pressures ease through the beginning of next year."

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