KOSPI breaks 7,000 on Alphabet earnings, Citi eyes 10,000 target

South Korea's benchmark KOSPI index broke through 7,000 points on Thursday, July 23, advancing 4.17% to close at 7,081.21. The surge extended a rally fueled by strong earnings from Alphabet and a rebound in the chip sector after weeks of AI-driven selling.

Alphabet's second-quarter performance provided the catalyst. The company reported revenue of $119.8 billion（約19兆円）, up 24% year over year, with Google Cloud revenue growth of 82%. Alphabet also raised its capital spending forecast, a signal that reinforced demand for AI infrastructure investment. The news lifted Samsung Electronics and SK Hynix, the KOSPI's two largest constituents, as both extended a rebound that had begun the previous week.

The rally arrives after the KOSPI fell into a technical bear market, having dropped as much as 28% from its June record high and triggering multiple circuit breakers and sidecars throughout the year. On Wednesday, July 22, the index had tested 7,000 but failed to sustain the level, closing 0.74% higher at 6,797.70 after an intraday surge of 5%. Thursday's hold above 7,000 marks a fresh test of that critical threshold.

Citi's investment team has maintained a 10,000 price target for the KOSPI, implying more than 50% upside from the levels the index touched earlier in the week. Citi analysts characterized the recent pullback as a potential buying opportunity, attributing the decline to technical profit-taking rather than any fundamental shift. However, headwinds persist: rising oil prices and unresolved tensions around Iran and the Strait of Hormuz, a key shipping route, tempered the rally without fully derailing it. Market participants remain uncertain whether the month's selloff has genuinely ended or merely paused.

The KOSPI's move through 7,000 on Thursday marks a potential turning point after a severe pullback. The index had fallen as much as 28% from its June record high and entered a technical bear market, triggering multiple circuit breakers and sidecars. However, the rally was reignited by Alphabet's earnings beat and capital spending guidance, which fueled demand for AI infrastructure and lifted semiconductor shares—the two largest drivers of the KOSPI. Citi's maintained 10,000 target signals confidence that the recent decline was profit-taking in a fundamentally sound market rather than a shift in underlying conditions.

Yet Thursday's advance faces a credibility test. The index breached 7,000 on Wednesday as well but failed to hold, closing 0.74% higher at 6,797.70 after an intraday 5% surge. This reversal suggests the rally remains fragile. Headwinds including rising oil prices and geopolitical tension around the Strait of Hormuz are tempering momentum. Whether the month's selloff has genuinely ended or merely paused depends on whether the KOSPI can sustain its position above 7,000 in the sessions ahead.