South Korean stocks jumped on Wednesday, supported by a return of investors to AI stocks, ahead of the announcement of results from major US technology and chip companies, following a sharp sell-off last week that erased billions of dollars from the sector's market value.

The main KOSPI index rose by 316.67 points, or 4.69 percent, to 7,064.62 points by 03:41 GMT, after earlier in the session recording gains of 6.2 percent. The KOSDAQ index for small-cap companies also rose by about 5 percent.

The KOSPI exchange activated the temporary trading suspension mechanism known as 'sidecar,' which is applied when the index moves up or down by 5 percent, for the 11th time in 15 trading sessions this month.

This reflects continued high volatility in the market, which is dominated by shares of Samsung Electronics and SK Hynix, the two companies leading the global AI chip race.

The Korean market's gains came after a strong session on Wall Street last night, with the Nasdaq index slightly higher, while the Philadelphia Semiconductor Index jumped more than 5 percent, posting its best performance in five weeks.

Investors are awaiting the earnings results of Alphabet, Intel, and Texas Instruments, which will provide indications about the performance of the AI and semiconductor sectors.

Jason Lui, head of equity derivatives strategy for Asia Pacific at BNP Paribas, said: 'After the sharp decline in stock prices, which was largely driven by valuations, investor positioning ahead of the results of major tech companies has become less crowded.'

He added that this will allow investors to 'better assess companies' growth prospects based on their fundamentals.'

On the KOSPI, shares of SK Hynix, the world's largest producer of memory chips dedicated to AI, jumped more than 9 percent, while Samsung Electronics rose 6.6 percent, continuing its gains from the previous session.

William Bratton, head of cash equity research for Asia Pacific at BNP Paribas, said: 'Without these two companies, there would not be much to be excited about in the South Korean stock market, at least from a long-term earnings growth perspective.'

He added: 'The two most exciting companies in South Korea are also among the most volatile, which creates risks for long-term investors who rely on a buy-and-hold strategy.'

Among other stocks, Hyundai Motor rose by as much as 7.14 percent, Kia climbed 3.11 percent, while LG Energy Solution, a battery maker, increased 3.8 percent.

Of the 915 stocks traded, 692 rose while 194 declined. Foreign investors recorded net purchases of 2.01 trillion won (about $1.36 billion), raising their net purchases over the past week through Tuesday to 2.71 trillion won.

In the currency market, the South Korean won was trading at 1,483 won to the US dollar, after recording in the previous session its highest level since mid-May at 1,471 won to the dollar.