Fears of an "AI Bubble" Easing? South Korean Stocks Surge Nearly 3%, Leading Gains in Asia-Pacific Markets

On Monday, as investor concerns about an "AI bubble" showed signs of easing, stock markets across the Asia-Pacific region moved higher, with South Korean equities leading the gains.

As of this writing, led by tech and financial stocks, the Korea Composite Stock Price Index (KOSPI) rose 2.84%, rebounding from its worst weekly performance in eight months.

News that NVIDIA CEO Jensen Huang had requested Taiwan Semiconductor Manufacturing Company (TSMC) to increase wafer supply alleviated market worries about excessive valuations in the artificial intelligence sector.

On November 8, Jensen Huang attended TSMC's annual sports games. He stated that given AI demand remains strong, he had requested TSMC to increase chip supply. TSMC CEO C.C. Wei also confirmed that Huang had indeed made the request for more wafers.

Beyond this, Monday's rebound in the South Korean stock market was also driven by two other unique positive factors: reports that South Korea plans to cut dividend taxes, and that the National Pension Service (NPS) might increase its allocation to domestic stocks.

Reports indicated that the South Korean government and the ruling party reached a consensus, planning to lower the maximum tax rate on dividend income from 35% to 25%. This move is part of broader efforts to boost the country's stock market.

In a report, Seo Sang-Young, an analyst at Mirae Asset Securities, noted that banking and securities stocks surged on the news of the dividend tax cut, providing support for the KOSPI.

Furthermore, reports suggested that the National Pension Service (NPS) is considering using its annual Tactical Asset Allocation (TAA) plan to raise the upper limit for its domestic stock investment ratio. The NPS is South Korea's state-owned investment company managing the national pension fund.