Fueled by a surge in global memory demand, shares of South Korea's largest chipmakers have soared, pushing the country's benchmark stock index to a new milestone just one month after breaking through the once-elusive 5000-point mark.
On Wednesday, the Korea Composite Stock Price Index (Kospi) rose 1.9%, reaching a record high of 6084 points, with shares of Samsung Electronics and SK Hynix both climbing more than 1%. Since the beginning of 2026, the benchmark index has gained 44%, and South Korea's total stock market capitalization surpassed that of France this week, having already exceeded Germany's last month.
Long overlooked by foreign funds despite low valuations, South Korean stocks have now become clear winners in global markets. The so-called "AI panic trade" has actually benefited the country—where software stocks represent a minimal share—as hardware manufacturers continue to drive the market higher. Corporate governance reforms have also contributed to the rally. On Wednesday afternoon, South Korea's National Assembly passed a bill requiring companies to cancel treasury shares.
This rally is part of a broader rebound in global technology stocks, following an announcement by Meta Platforms that it will purchase chips and computers from Advanced Micro Devices to power its AI models.
Jung In Yun, CEO of Fibonacci Global Asset Management, stated, "With the Kospi index above 6000 points, further gains may become more gradual. The sustainability of the uptrend will depend on whether corporate earnings materialize and whether the market can broaden effectively beyond a few semiconductor giants. If not, some degree of consolidation or sector rotation would not be surprising."
Last week's ruling by the U.S. Supreme Court to overturn the Trump administration's reciprocal tariff policy is also seen as positive for South Korean stocks. Tiffany Hsiao, a portfolio manager at Matthews, predicted, "South Korean exporters linked to U.S. consumer demand—especially in electronics and components—will benefit from any reduction in tariff uncertainty."
There are early signs that South Korean retail investors, who have traditionally favored U.S. stocks, are returning to the domestic market. If this trend continues, it could help initiate a new wave of stock market gains.
At the end of January, South Korea's stock market capitalization overtook Germany's; this week, it climbed to $3.76 trillion, surpassing France despite having a much smaller economy. Such rapid gains often raise concerns, and some market observers are closely monitoring valuation levels.
Matthew Haupt, portfolio manager at Wilson Asset Management in Sydney, said, "I had considered buying Kospi futures, but given the index's relative performance over the past month, initiating new long positions is now quite challenging."
Since the start of 2025, Samsung's share price has risen nearly fourfold, while SK Hynix's stock has surged sixfold.
Despite these gains, analysts remain broadly optimistic, believing that South Korea's two leading chipmakers will continue to benefit from tight memory supply and strong AI demand. Both Citigroup and Macquarie Capital raised their price targets overnight, with Macquarie's target for Samsung implying a 65% upside from current levels.
Nomura recently raised its half-year target for the Kospi to 8000 points, citing the memory super-cycle, strong earnings in the AI capital expenditure chain and defense sectors, and valuation reassessments of physical AI supply chains.
In a report, Nomura analysts Cindy Park and Dongmin Lee wrote, "If South Korea can accelerate corporate value reforms and structural improvements in the Kosdaq market, we expect the index could surpass 8000 points, achieving further valuation reassessment."
They also noted that the path to 8000 points depends on whether the South Korean government can deliver on its reform commitments through multiple revisions of the Commercial Act, the country's core business law.
The latest revised bill requires the cancellation of treasury shares, eliminating a mechanism that governance experts say has allowed chaebol owners to consolidate control over companies with minimal direct ownership.
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