Asia report: Stocks rebound after heavy losses, led by South Korean tech

(Sharecast News) - Asian stock markets were showing green across the board on Thursday, with investors bargain-hunting after some recent heavy losses as bond yields eased.

The Nikkei 225 gained 1.4%, after having dropped 5.6% over the past two trading sessions alone. Seoul's KOSPI index continued to produce dramatic swings, jumping 5.9% as it attempts to recover following a 7.3% drop over the past two days.

Tech stocks were broadly higher, with those in AI-linked sectors in particular receiving a big boost.

Gains were more muted elsewhere: Hong Kong's Hang Seng and Bombay's Sensex both rose 0.8%, the Shanghai Composite was 0.2% higher, and Sydney's S&P/ASX 200 gained 0.3%.

A sell-off across global bond markets had led to a reduction in risk appetite among equity investors in recent days, with yields on long-term bonds across the UK, US, Japan, Germany and France hitting highs not seen since before the financial crisis.

However, a drop in US Treasury yields on Wednesday helped to improve sentiment after the Treasury Department said it would ramp up its repurchases of longer-term government debt in an effort to bring rates down.

"The [equity] rally shows how quickly sentiment can recover when duration pressure eases, especially in AI-linked markets where valuation sensitivity to long-end yields is high," said Patrick Munnelly, partner of market strategy at Tickmill Group.

"The rebound in Korea is also a reminder that the AI trade is bruised, not broken. Earlier semiconductor outflows and the sharp fall in chip stocks showed investors were cutting crowded exposure, especially in levered and high-beta expressions. But the combination of lower long-end yields and shareholder-return announcements has restored some confidence."

South Korean chip group SK Hynix was beneftting from a return in risk appetite, surging 12% following the announcement of a massive $29bn share buyback.

Other Seoul-listed tech groups were also making decent gains, including tech-focused investment firm SK Square and consumer tech giant Samsung Electronics.