^{Hongdae street in Seoul city, South Korea |Twenty47studio | Moment | Getty Images}

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Asian equity markets staged a strong comeback on Monday, led by South Korea’s Kospi, which surged more than 3.4% after a brutal week of losses triggered by concerns over inflated artificial intelligence valuations. Investors returned to buying mode as regional confidence improved, buoyed by positive inflation data from China and signs of resilience in financial and technology sectors.

Markets across the Asia-Pacific region rebounded broadly after last week’s steep declines that wiped out billions in market capitalization. Traders were encouraged by a mix of stabilizing inflation indicators from China and renewed optimism that the AI sector’s correction had run its course.

South Korea Leads the Rally

South Korea’s Kospi index jumped 3.48%, its sharpest single-day rise in months, driven by robust gains in banking and insurance stocks. The smaller Kosdaq rose 1.29%, adding momentum to the regional upswing.

Market heavyweights helped propel the rally — Samsung Electronics gained 2.6%, while chip giant SK Hynix soared 5.78%, reflecting renewed investor appetite for tech shares after last week’s AI-related downturn.

Other top performers included SK Inc, the holding company of the SK Group conglomerate, which surged 10%, and GS Holdings, a diversified energy and construction giant, which climbed over 11%.

The rebound highlights the resilience of South Korea’s equity market despite global volatility and chip-sector headwinds. Analysts said investors were positioning for long-term growth opportunities in semiconductor demand and financial sector recovery.

Regional Market Overview

Elsewhere in Asia, Japan’s Nikkei 225 gained 1.31%, with the broader Topix index up 0.62%. The rise came as Japanese government bond yields hit their highest level since October, touching 1.695%, amid speculation that the Bank of Japan (BOJ) could raise interest rates sooner than expected.

Minutes from the BOJ’s October meeting suggested policymakers believe conditions for a rate hike are “almost met,” though they also cautioned that the central bank must first assess whether underlying inflation has become firmly established.

In Hong Kong, the Hang Seng Index climbed 0.89%, extending modest gains after last week’s selloff. However, China’s CSI 300, which tracks major mainland stocks, slipped 0.24%, as investors remained cautious about sluggish domestic demand and ongoing property market concerns.

In the Pacific region, Australia’s S&P/ASX 200 advanced 0.73%, boosted by mining and energy shares. India’s Sensex rose 0.51%, while the Nifty 50 added 0.43%, helped by strength in banking and IT sectors.

China’s Inflation Data Adds Momentum

Investor sentiment improved following new Chinese inflation figures that came in above expectations. Headline consumer inflation rose 0.2% year-over-year in October, compared to flat expectations, while producer prices fell 2.1%, a smaller decline than forecast.

The data suggested that deflationary pressures may be easing in the world’s second-largest economy, offering a glimmer of hope for global investors concerned about weak Chinese demand. Economists said the figures could pave the way for a gradual recovery in domestic consumption heading into 2026.

Global Context and Investor Sentiment

The rebound in Asia came against a backdrop of uncertainty in U.S. markets. On Friday, the Nasdaq Composite continued to decline as investors rotated out of high-growth tech stocks, while the Dow Jones Industrial Average and S&P 500 edged slightly higher after reports that U.S. lawmakers were nearing an agreement to end the record-breaking government shutdown.

Adding to investor caution, a University of Michigan survey showed that U.S. consumer sentiment is nearing its lowest level on record. Meanwhile, Challenger, Gray & Christmas reported that October layoffs hit their highest level for that month in 22 years, reflecting a cooling labor market and renewed concerns about economic growth.

Outlook

Despite last week’s turbulence, analysts say the latest rally indicates that Asian markets remain fundamentally strong. Easing Chinese inflation, resilient corporate earnings, and renewed investor confidence in semiconductor and banking stocks could help sustain the region’s recovery in the near term.

“The panic over AI valuations seems to be fading,” said one Seoul-based strategist. “Investors are once again focusing on long-term fundamentals rather than short-term noise.”

With central banks in Japan and China hinting at cautious optimism and U.S. political tensions showing signs of resolution, the Asia-Pacific region may be poised for a steadier finish to the year.