South Korea’s benchmark Kospi index rebounded as much as 4.6% in early trade after plunging 10% on Tuesday. The index closed 3.3% higher after trade turned volatile around midday.
Chip giants Samsung Electronics and SK Hynix closed 9.8% and 1% higher, respectively.
Elsewhere, trading was mixed. Japan’s Nikkei 225 ended 0.9% lower.
Hong Kong’s Hang Seng Index gained as much as 1%. Taiwan’s Taiex lost 2.2%, as heavyweight chipmaker TSMC closed 4% lower.
The moves followed a sharp rout in global technology stocks, as investors dumped high-flying semiconductor and artificial-intelligence names.
“Part of the move in tech reflects funds taking profits and recognising that the risk-reward profile has shifted, particularly given the crowded positioning across parts of the global AI infrastructure and memory complex,” wrote Chris Weston, the head of research at Pepperstone, in a note.
The volatility highlights how exposed some of Asia’s biggest equity markets have become to shifts in sentiment around AI.
South Korea has been among the world’s best-performing stock markets this year, driven by a rally in semiconductor and AI-related shares. But that strong run has left the market vulnerable to any reversal in the global AI trade.
“Overall, whether these moves continue will depend on whether the market believes the cashflows from deployment and diffusion of AI models justify the infrastructure build-out that we are seeing right now,” Michael Wan, an analyst at Japan’s MUFG, wrote in a note on Wednesday.
Despite the recent turbulence, Wan said he remains positive on the sector’s longer-term prospects.
“We tend to lean towards a more positive view and see us as just in the initial innings of a generational shift in technology deployment as the bigger picture beyond the near-term volatility,” Wan wrote.
US futures were mixed as of around 7 a.m. ET: