SK Hynix jumped 12% and Samsung Electronics gained 8.9% on Thursday, pushing South Korea’s Kospi up 6.13%.

The rally didn’t start with a chip headline. It started with the US bond market, which has experienced volatility in recent days. Not to mention the highly volatile Korean markets, driven by a number of factors related to AI.

The SK Hynix Buyback

First, SK Hynix disclosed plans to repurchase and cancel 40 trillion won ($28.8 billion) of its own shares. No Korean company has ever announced a buyback this large.

The move would retire about 3.3% of outstanding shares. Fewer shares outstanding lifts earnings per share and return on equity, two metrics investors watch closely.

Kiwoom Securities analyst Han Ji-young said the buyback should support the stock structurally.

“SK hynix’s share buyback and cancellation could improve earnings per share (EPS) by reducing the number of shares outstanding and raise return on equity (ROE) by reducing shareholders’ equity, which should provide stronger downside support for the stock price.”

— Han Ji-young, Kiwoom Securities

That explains SK Hynix’s move. It doesn’t explain why Samsung, which announced no buyback, jumped alongside it, or why the whole Kospi reversed Wednesday’s sharp selloff at the same time.

Why Bond Yields Move Chip Stocks

The US Treasury said Wednesday it would double buybacks of long-dated government bonds to ease pressure on borrowing costs. The 30-year yield fell roughly ten basis points overnight.

Falling yields lower the discount rate investors apply to future earnings. That math hits growth stocks hardest, and Samsung and SK Hynix trade on the market’s expectations for years of AI-driven chip demand, not just this quarter’s results.

Korea Times reported that KB Securities strategist Lee Eun-taek has flagged the reverse risk. He said a US 10-year Treasury yield near 5% to 5.3% could signal trouble for the AI investment cycle, since higher rates may push lenders to pull back on financing for data center buildouts.

That financing link matters here too. Hyperscalers building AI data centers raise much of that money through corporate bonds, competing directly with Treasuries for capital. When Treasury yields ease, that borrowing gets cheaper, and the AI capex cycle that Samsung and SK Hynix supply memory chips into gets a little more secure.

That’s the mechanism connecting a Seoul chipmaker’s share price to a Treasury buyback announced in Washington.

Source: BeInCrypto