Samsung's performance exceeded expectations, combined with government restrictions on leveraged ETFs, and the Korean stock market changed from decline to rise

The Zhitong Finance App learned that the Korea Composite Stock Price Index (Kospi) rebounded and closed higher on Thursday, plummeting 16% cumulatively over the previous two trading days. The net profit for the second quarter announced by Samsung Electronics surged more than 250 times over the same period last year. Combined with the government's announcement of new measures to further restrict the participation of retail investors in leveraged ETFs, it boosted market sentiment.

At one point, the Kospi Index rose more than 4. %. As of press time, it had risen 2.76%, and Samsung Electronics' stock price had risen 7.91%. SK Hynix's stock price rose 2%, and the stock had a cumulative decline of nearly a quarter over the previous two trading days.

On July 30, Samsung Electronics announced that sales for the second quarter reached 171.5 trillion won, an increase of 130% over the previous year. Net profit increased by 1299.9% to 71.62 trillion won, exceeding the estimate of 68.36 trillion won.

Consolidated operating profit for the second quarter of this year was 89.49 trillion won, a year-on-year increase of 1813.8%. The operating profit exceeded market forecasts by 84.1894 trillion won, an increase of 6.3%. Operating profit and sales have both broken the record for the highest single quarter in history for three consecutive quarters.

This performance exceeded analysts' expectations, thanks to strong demand in the field of artificial intelligence continuing to drive the growth of its memory chip business. Samsung Electronics said that demand for semiconductors is expected to remain strong in the second half of the year, which will help overall profits continue to grow.

Josh Gilbert, chief analyst at eToro Asia Pacific and Middle East, said: “The current level of volatility is already the cost of entry into the market, not proof of the end of the AI narrative.”

After two consecutive days of sharp falls and huge market capitalization evaporated, senior officials from South Korea's Ministry of Finance, the Bank of Korea, and financial regulators held an emergency meeting on Wednesday evening to promise to introduce more measures to stabilize the stock market and restrict retail investors from participating in leveraged ETFs. According to South Korea's Ministry of Finance, the new measures include setting an upper limit on the ratio of leveraged ETF holdings to investors' total assets and increasing transaction costs to curb excessive participation by retail investors.

As investors began to question the sustainability of the AI trading narrative, the Kospi Index had a cumulative decline of about 40% since its peak in June, and the decline deepened further this week. On Wednesday, the Kospi Index triggered a fusing mechanism for the second consecutive trading day, the first time in history.