TradingKey - On August 20, South Korea's KOSPI Index closed up 5.89% at 6,852.58 points. During intraday trading, the Korea Exchange activated a sidecar mechanism, suspending KOSPI program buy orders. Meanwhile, the Nikkei 225 Index (JPN225) rose 1.36% to close at 66,216.79 points, reflecting a clear recovery in market risk appetite.

Source: TradingView

Large-cap tech stocks were the primary driver behind the rally in South Korean equities. SK Hynix jumped 12.73% to 1,691,000 won (about $1,215), while Samsung Electronics rose 9.49% to 271,000 won.

In the Japanese market, Kioxia rose 6.01% to 52,950 yen (about $334), and SoftBank Group advanced 3.06% to 5,387 yen, as the semiconductor and tech sectors broadly attracted capital inflows.

The strong performance of South Korean chip stocks is closely linked to companies' ongoing efforts to boost shareholder returns.

Reports on Thursday indicated that Samsung Electronics plans to finalize a new shareholder return plan following its board meeting this month, with the scale expected to exceed 100 trillion won (approximately $71.9 billion). Under the current plan, the company will allocate 50% of its free cash flow to shareholder returns, with cash dividends likely serving as the primary vehicle.

SK Hynix also announced on Wednesday that it will repurchase and cancel treasury shares worth approximately 40 trillion won (about $28.6 billion), while committing to allocating at least half of its free cash flow to shareholder returns from 2025 to 2027.

JPMorgan (JPM) further estimates that on top of the announced 40 trillion won buyback plan, SK Hynix could return at least $130 billion to shareholders through 2027.

Notably, preliminary data released by the Bank of Korea on Thursday showed that foreign investors' investments in South Korean financial assets grew rapidly in the second quarter of this year. As of the end of June, total foreign investment reached $3.02 trillion, up $891.2 billion from the first quarter, surpassing $3 trillion for the first time while marking the largest single-quarter increase since the central bank began compiling relevant statistics in 1994.

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