South Korea's KOSPI index rebounded sharply on Thursday, surging 12% to 5,695.64 points after two days of steep declines. The rebound followed a 10.7% gain by midday trading, erasing earlier losses that had wiped out most of its annual gains. The index had previously fallen amid geopolitical tensions in the Middle East and fears over AI market volatility, prompting profit-taking across sectors.

Samsung Electronics and SK Hynix, key players in South Korea's tech sector, led the rally with 12% jumps each. Automaker Hyundai Motor also surged, reflecting renewed investor confidence. The rebound underscored the index's resilience despite earlier volatility, with analysts noting strong institutional buying in chipmakers and industrial firms.

The KOSPI remained up ~30% for the year as of last week, driven by optimism about South Korea's AI and semiconductor leadership. However, the recent sell-off highlighted risks from global uncertainties, including escalating U.S.-Iran tensions. Market sentiment had turned bearish in late February due to overleveraged positions, but Thursday's rally suggested a potential shift toward cautious optimism.

This volatility illustrates the delicate balance between South Korea's tech-driven growth and external shocks. While the rebound signals short-term recovery, long-term stability hinges on navigating geopolitical risks and sustaining AI investment momentum. Investors will closely monitor U.S.-Middle East developments and global AI adoption trends