KOSPI Index rallies and gets overbought as the AI boom gains steam

The KOSPI Composite Index continued its strong bull run after crossing the key milestone at KRW 5,000. It jumped to a record high of KRW 5,380 this month, meaning that it has soared by 132% from its 2025 low, making it one of the best-performing indices globally.

This article explores why the KOSPI is in an unstoppable bull run and whether it is a buy as it gets extremely overbought.

South Korean stocks continue rally as the AI fears fade

The KOSPI Index has been in a strong bull run in the past few months, helped by the ongoing friendly policies implemented by the country’s president, who predicted that it would jump to KRW 5,000.

This rally accelerated after South Korea and the United States reached a trade deal last year. This deal saw Donald Trump reduce tariffs in exchange for massive South Korean investments in the United States.

The KOSPI Index has thrived as the artificial intelligence boom gained steam. This is important as South Korea is one of the biggest players in the industry, with companies like Samsung and SK Hynix being the most significant.

The index continued rising on Tuesday, mirroring the performance of its American counterparts like the Nasdaq 100 and S&P 500 indices, which approached their all-time highs this week.

Fears of the AI industry waned after Google raised $20 billion in its biggest US dollar bond sale as it seeks to boost its AI spending. In a statement last week, the top four companies in the industry said that they would spend over $660 billion on AI this year.

This spending will boost top South Korean companies, especially those that make memory products. SK Hynix, a top memory company that supplies products to NVIDIA, jumped by 150% since September, while Samsung soared by 40% this year.

Meanwhile, recent data showed that South Korean growth is continuing. Consumer inflation has plunged to the lowest level in five months, while the manufacturing PMI jumped to the highest level in 17 months. 

Additionally, a report showed that the trade surplus moved into a surplus, with its export growth accelerating to the highest level since 2021. Its current surplus surged to a record high in 2025.

Foreigners have also continued moving to South Korea,  which explains why the won has pulled back in the past few days.

Most companies in the KOSPI Composite Index have soared this year. Mirae Asset soared by 124% this year, while Daewoo Engineering, Hanwha Systems, Hannong Chemicals, Kumho Electric, and Korea Electric Power jumped by double digits this year.

KOSPI Composite Index technical analysis 

The weekly chart shows that the KOSPI Index has been in a strong uptrend in the past few months, moving from a low of KRW 2,308 in April last year to KRW 5,310.

It has moved above the 50-week and 100-week Exponential Moving Averages (EMA) and the Supertrend indicator, a sign that bulls remain in control for now.

The main risk, however, is that the Relative Strength Index (RSI) and the Stochastic Oscillator have continued soaring and are now comfortably in the overbought level.

Therefore, the most likely scenario is where Index continues rising in the near term, followed by a pullback, potentially to the key support level at KRW 5,000. 

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