FTSE Russell's global investment research manager Zhang Ruopeng and Tae Yoon Kim noted that the South Korean stock market achieved a total return as high as 96% in 2025, delivering a stellar performance. This positive momentum continued into 2026, with South Korea ranking as one of the top-performing markets in the Asia-Pacific region (+48.7%) as of April 15. This robust performance is underpinned by a distinct economic recovery in South Korea during 2025, significantly bolstered by strong growth in semiconductor exports, which provided substantial support for overall economic momentum and stock market performance. Ongoing corporate governance reforms, coupled with South Korea's global leadership in AI hardware, are continually strengthening the market's appeal for sustainable long-term investment.
FTSE Russell points out that from Q4 2023 to Q1 2025, South Korea's economic growth showed a gradual deceleration trend, with weakening exports being the primary drag amid a cooling global economy. However, a front-loading effect in exports led to a temporary rebound in Q2 2025. This improvement gained further strength in the second half of 2025, primarily driven by the rapid growth in AI-related demand, which significantly spurred a recovery in semiconductor exports and re-established them as a crucial force supporting both the economy and the market. Since May 2025, South Korea's semiconductor exports have consistently maintained double-digit growth. Against the backdrop of an accelerating global AI investment cycle, robust AI demand has notably driven order growth for South Korea's High Bandwidth Memory (HBM). Currently, South Korean companies collectively hold approximately 80% of the global market share in HBM. In contrast, South Korea's overall automotive exports in 2025 remained relatively stable. Notably, however, exports to non-US markets continued a growth trend, primarily led by electric vehicles.
This improvement in solid fundamentals was also reflected in stock performance in 2025. The year saw not only a synchronized recovery in exports and economic growth but also the stock market mirroring the broader macroeconomic improvement. Following a subdued performance in 2024, the South Korean stock market significantly outperformed both the Asia-Pacific market (+28%) and the global market (+23%) in 2025, delivering a total return of 96% in USD terms. At the sector level, the technology (+90%) and telecommunications (+31%) sectors were the leading gainers in 2025, and this positive momentum has extended into 2026.
FTSE Russell believes that the development of artificial intelligence has shifted technological leadership from software to hardware. Hardware companies benefit from tangible demand, guaranteed orders, and short-term cash flows. Consequently, markets with a heavier focus on hardware and telecommunications equipment, such as Japan, South Korea, and Taiwan, have performed exceptionally well. Beyond long-term factors like structural policy reforms, the AI-driven surge in demand within the memory chip sector served as a key catalyst for South Korea's significant stock market outperformance in 2025. As illustrated below, the performance of the technology and telecommunications sectors clearly led other industries.
FTSE Russell states that South Korea's leading position in high-performance memory continues to translate into strong earnings performances and positive future guidance for SK Hynix and Samsung Electronics. Furthermore, NVIDIA has announced its intention to deepen strategic cooperation with the South Korean government and key companies, including Samsung Electronics, SK Hynix, SK Telecom, and Hyundai Motor (in the field of autonomous driving), to further develop AI-related infrastructure and technology.
Comments