South Korean stocks have rebounded into a technical bull market just two weeks after a severe selloff, as renewed optimism over artificial intelligence-driven demand for memory chips lifted Samsung Electronics and SK Hynix and helped the benchmark Kospi recover sharply from its July low.

The Kospi closed 4% higher on Thursday at 6,813.34, putting the index 22% above its July 30 closing low and meeting the widely used threshold for a technical bull market, generally defined as a gain of at least 20% from a recent trough.

The rebound marks a dramatic reversal from the market’s steepest recent decline. The Kospi plunged about 40% between its June 22 peak and July 30 low, with losses concentrated in the index’s largest technology companies.

Samsung Electronics and SK Hynix, the two dominant components of the Korean stock market, were at the center of both the selloff and the recovery. Their shares gained 5% and 6%, respectively, on Thursday as investors returned to semiconductor stocks on expectations that demand for memory used in AI systems will remain exceptionally strong.

The speed of the turnaround suggests that July’s collapse may have been driven more by positioning and capital flows than by a fundamental deterioration in South Korea’s technology sector.

Analysts at Macquarie Capital said the sharp decline, during which the Kospi lost 22% in July alone, appeared to have been driven primarily by investor positioning and fund flows. Foreign and institutional selling has stabilized since late July, while margin financing remains at reasonable levels, the analysts said in a note.

“The volatility is over,” Macquarie said.

The stabilization of fund flows has provided room for investors to reassess the outlook for the country’s semiconductor industry, particularly as demand for memory chips used in AI infrastructure continues to accelerate.

Samsung and SK Hynix accounted for 71% of the Kospi’s losses during July, according to Macquarie. Their shares fell 48% collectively during the rout, compared with a 26% decline across the remainder of the market. That concentration has also amplified the subsequent recovery. As investors returned to the two companies, their large weightings in the index helped propel the broader Kospi higher.

Macquarie expects the two chipmakers to remain at the forefront of the rebound, supported by what it describes as an increasingly severe imbalance between AI-related memory demand and available supply.

“We are facing the worst memory crunch in history and see no signs of supply constraints easing within the next three years,” the bank said.

The investment bank said demand generated by AI inference, the process of running trained AI models to produce responses and perform tasks, is “off the charts.” Unlike traditional computing workloads, large-scale AI systems require substantial amounts of high-bandwidth memory and other advanced memory products, putting additional pressure on manufacturers.

The supply response is also constrained by the complexity and cost of expanding semiconductor production. Memory manufacturers cannot rapidly increase output simply in response to a sudden increase in demand, making supply shortages potentially persistent if AI infrastructure investment continues to accelerate.

That dynamic has strengthened the investment case for South Korea’s semiconductor industry even as the market remains highly volatile.

The Kospi’s recovery, however, does not guarantee that the broader rally will continue. A technical bull market describes the magnitude of a rebound from a low rather than the durability of the underlying trend.

The index is up 3.3% so far in August, suggesting trading conditions have become calmer following July’s severe losses. The stabilization of foreign and institutional flows could provide further support, although the market remains highly sensitive to movements in major semiconductor stocks.

Macquarie has set a year-end target of 8,000 for the Kospi, implying about 17% upside from Thursday’s closing level of 6,813.34.

The forecast rests heavily on continued strength in AI-related semiconductor demand. If memory demand remains strong and supply remains constrained, Samsung and SK Hynix could continue to drive earnings growth and support higher valuations.

For investors, the rapid shift from a 40% market decline to a technical bull market in just two weeks shows that sentiment can quickly change in a market dominated by semiconductor companies.

South Korea’s latest rally is therefore both a recovery story and an AI infrastructure story. The same concentration in chip stocks that intensified the July selloff is now accelerating the rebound, leaving the Kospi’s next phase closely tied to the outlook for memory prices, AI investment, and the earnings trajectory of Samsung and SK Hynix.

Global demand for electric vehicles rose for a fifth consecutive month in July, with a strong recovery in Europe more than offsetting weaker sales in China and North America, according to data from Benchmark Mineral Intelligence.

Sales of battery-electric and plug-in hybrid vehicles increased 9% from a year earlier to 1.85 million units in July, taking global sales for the first seven months of the year to 11.5 million vehicles.

The figures point to a widening divergence across the world’s major electric-vehicle markets. Europe has emerged as a key source of growth as government incentives support consumer demand, while sales in North America have weakened following the removal of U.S. federal EV tax credits. China’s market, meanwhile, has contracted as domestic manufacturers increasingly look overseas to sustain growth.

Europe recorded the strongest performance among the major markets in July, with sales climbing 33% to 450,000 vehicles. Year-to-date sales in the region were up 28%.

“High growth persisted in Europe’s larger automotive markets, many of which have experienced a return of an EV subsidy scheme over the past 18 months,” Benchmark Mineral Intelligence said.

France, Germany and Britain all recorded substantial increases in July. EV sales rose 81% in France, 46% in Germany and 43% in Britain compared with the same month a year earlier.

The European acceleration marks a notable shift in the global EV market. After a period of slower growth and uncertainty over consumer incentives, several major European economies have reinstated or expanded support for electric vehicles, helping reduce the upfront cost for buyers and strengthening demand.

China remained the world’s largest EV market but recorded a 5% decline in July, with sales falling to 980,000 vehicles. The slowdown in China is significant because the country has been the principal engine of global EV growth for much of the past decade. Chinese automakers have expanded rapidly through aggressive pricing, extensive domestic production, and a growing range of battery-powered models.

With domestic demand weakening, Chinese manufacturers are increasingly looking to international markets for additional growth. That shift is intensifying competition for established automakers in Europe and other regions, where Chinese EV brands are expanding their presence.

North America posted the sharpest decline among the major markets tracked by BMI. Sales fell 27% to 140,000 vehicles following the end of U.S. federal tax credits for electric-vehicle purchases.

The decline denotes the influence of government policy on EV adoption. While automakers have invested heavily in electric models and battery production, consumer demand remains sensitive to purchase incentives, vehicle prices, and charging infrastructure.

The United States has also faced slower EV adoption than some manufacturers had anticipated, prompting several automakers to reassess the pace of their electric-vehicle investments and product rollouts.

The weakness in China and North America was offset in part by a surge across other markets. EV sales in the rest of the world jumped 97% to 280,000 vehicles in July, indicating that adoption is spreading beyond the traditional centers of the global electric-vehicle industry. The contrasting regional trends are reshaping the competitive landscape for automakers and battery manufacturers.

Europe’s growth provides manufacturers with an expanding market at a time when demand in China is becoming more difficult to sustain at previous rates and U.S. policy has become less supportive. At the same time, the growing export push by Chinese automakers is likely to increase competition in markets where consumers are benefiting from a broader selection of lower-priced electric vehicles.

The global figures also show that the EV transition remains intact even as its pace varies sharply by region. July marked the fifth consecutive month of year-on-year global sales growth, with 1.85 million battery-electric and plug-in hybrid vehicles sold worldwide.

The challenge for automakers is becoming regional rather than simply global. Companies must navigate different subsidy regimes, consumer preferences, trade policies and competitive conditions while managing large investments in electric-vehicle manufacturing and battery supply chains.

Europe’s strong July performance suggests that incentives remain an effective demand lever, while the decline in North America demonstrates how quickly sales can weaken when those incentives disappear. China’s contraction, meanwhile, signals that the world’s largest EV market may be entering a more competitive phase in which manufacturers increasingly depend on exports to maintain growth.

With global EV sales already reaching 11.5 million units in the first seven months of the year, the industry continues to expand, but the latest data show that the next stage of the transition will be defined by different trajectories across individual markets.