On April 22, the Korea Composite Stock Price Index (KOSPI) closed up 0.46% at 6,417.93 points, setting another record closing high. The previous day, the benchmark index opened higher and finished at 6,388.47 points, a gain of 2.72%, also reaching a historic closing peak. This rally was primarily driven by heavyweight stocks such as Samsung Electronics and SK Hynix. During the session, SK Hynix surged over 5% to 1.228 million won, hitting an all-time high, and closed up 4.97%. Samsung Electronics ended the day 2.1% higher. The benchmark index had already erased losses incurred since the outbreak of the U.S.-Iran conflict the day before.
In fact, the South Korean stock market has recently shown consistently strong performance. After the KOSPI first surpassed the 6,000-point mark on April 15, it has continued to climb. As of April 22, the index has accumulated a year-to-date gain of 52.29%, outperforming all other major global equity markets.
When President Lee Jae-myung first took office, he proposed a goal of pushing the KOSPI to 5,000 points. At that time, however, the index was hovering around 2,700 points, still far from the target. Surprisingly, since the beginning of 2026, the KOSPI has experienced a sharp rise.
Market analysts widely believe that the surge in South Korean stocks is not only benefiting from optimism surrounding U.S.-Iran negotiations but is also fueled by the global artificial intelligence (AI) boom. Strong demand from U.S. companies for AI-related services and massive spending by global tech giants on AI data centers have tightened supplies of DRAM and NAND flash memory chips—the two main types of memory chips—as well as high-bandwidth memory (HBM), while driving prices higher.
Goldman Sachs is optimistic about the South Korean stock market's trajectory, noting that attractive current valuations, driven by growing AI chip demand and upward revisions to corporate earnings expectations, have prompted the firm to raise its target for the KOSPI from 7,000 points to 8,000 points.
After multiple consecutive rounds of gains, has the so-called "Korea discount" been completely eliminated? And how long can the current super-cycle in memory chips support the South Korean stock market?
**Has the "Korea Discount" Changed?** Although conflict in the Middle East has not fully subsided, market sentiment has gradually shifted toward optimism, refocusing on AI-related stock sectors.
The rise in South Korean stocks is first attributed to the AI-driven super-cycle in memory chips. Samsung Electronics and SK Hynix, as global memory chip leaders, have seen soaring performance due to explosive demand for core AI memory products like HBM. Second, the Lee Jae-myung administration's "Corporate Value-up Program," which includes mandatory treasury stock cancellations and reforms to board operation mechanisms, aims to systematically improve corporate governance and enhance shareholder returns, effectively addressing the "Korea discount" issue and attracting global capital back. Third, the South Korean government's "Foreign Investment Access Reform" introduced last April, which eliminated foreign ownership limits and simplified account opening procedures, has spurred significant net foreign buying. Domestic retail and institutional investors have also entered the market actively, combined with earlier government signals of massive market rescue funds, driving a V-shaped reversal and breaking previous highs.
So far, Samsung Electronics and SK Hynix—a key HBM supplier to NVIDIA—have seen their stock prices rise approximately 70% and 60%, respectively.
Market observers generally believe that South Korea's capital market reforms have, to some extent, drawn lessons from Japan's experience. As early as July 2023, Japan introduced a similar JPX Prime 150 index, comprising top-performing Japanese companies to help investors more easily identify valuable enterprises.
Compared to Japan's stock market reforms, South Korea's measures are more systematic. They not only continue the Japanese exchange's focus on capital costs but also coordinate a package of measures including foreign investment access, dividend processes, treasury stock regulation, short-selling rules, index tools, and tax incentives. These reforms, led by regulatory authorities, have brought visible changes such as improved information accessibility, reduced friction in foreign account opening and trading, and enhanced shareholder influence.
However, it is also noted that the causes of the "Korea discount" are not only due to insufficient market information disclosure but also stem from long-term capital allocation biases under the chaebol system favoring controlling shareholders and industrial expansion. Reforms in this area may proceed more slowly.
Regarding foreign holdings, data from the Korea Exchange show that as of January this year, foreign ownership in the securities market rose to 37.18%, the highest level since April 2020.
Foreign capital is a crucial supporting force for the South Korean stock market. The market is highly internationalized, with foreign investors accounting for a significant share of trading volume and holdings in weighted stocks. Particularly during upward cycles in the semiconductor industry, foreign capital often leads in positioning in South Korean tech leaders. The attractiveness of South Korean stocks to foreign investors mainly stems from relatively reasonable valuations, strong export industry competitiveness, and continuously opening market systems.
Although the KOSPI has already risen over 50% this year, many institutional analyses suggest that South Korean equities remain highly attractive. At the same time, optimism toward semiconductor stocks driven by AI and expectations for comprehensive corporate governance reforms are steadily altering the long-standing "Korea discount."
**Memory Chip "Super-Cycle" Emerges** Behind the recent surge in South Korean stocks, a memory chip super-cycle ignited by AI computing demand has drawn significant attention.
The KOSPI has soared, with SK Hynix and Samsung Electronics leading the gains. Samsung Electronics' preliminary first-quarter 2026 results show quarterly sales surpassing 130 trillion won for the first time, reaching approximately 133 trillion won, a 68% year-on-year increase. Operating profit surged 755% to about 57.2 trillion won, exceeding the full-year 2025 operating profit of 43.6 trillion won. Meanwhile, strong AI demand has prompted multiple investment firms to raise their earnings forecasts for SK Hynix.
Market optimism toward Samsung and SK Hynix is largely due to their sales to customers who are less price-sensitive and prioritize delivery and performance. HBM, server DDR5, and enterprise SSDs are no longer standardized commodities but essential components of AI infrastructure. HBM, in particular, faces bottlenecks in packaging, verification, yield, and delivery cycles, making supply increases difficult to match demand and leading to significant price elasticity. The outperformance of Samsung and Hynix in this cycle is not a traditional recovery but a result of premium memory products regaining pricing power. Samsung's strengths lie in its large scale, broad customer base, and ability to catch up in HBM4 technology; SK Hynix benefits from first-mover advantage, market share, and deep ties with key AI clients.
Memory cycle-driven stock rallies are not unprecedented. Prior to the current AI-driven "super-cycle," memory industry cycles were primarily influenced by relatively predictable demand growth from consumer electronics, PCs, and smartphones, with major fluctuations arising from supply-side shocks. However, the current cycle features structural demand explosion and a supply shift toward high-end HBM, leading to a "super-cycle" or structural tight balance, partially altering the traditional logic of oversupply.
Companies are now focusing more on supply stability than price in capital expenditures. Samsung, SK Hynix, and Micron are moving toward 3–5 year long-term agreements, with existing HBM inventories expected to last until 2027, indicating a certain weakening of memory chip cyclicality.
This memory "super-cycle" is fundamentally different from previous 3–4 year cycles, driven by AI-induced structural changes and business model shifts. Dominated by explosive AI computing demand, DRAM requirements in AI servers have surged 8–10 times, upgrading memory from a cost component to a strategic computing resource.
Changes in the memory industry's business model are extending the cycle's duration and profitability beyond historical levels. Key transformations include the prevalence of long-term strategic agreements, reduced cyclicality as memory trends toward foundry-like stability, and technology-driven competition replacing scale-driven expansion.
Market analysts predict that tight supply-demand balance in the memory industry will persist. Supply shortages are expected to continue until 2027, with price increases lasting throughout 2026. Several factors support the cycle's extension: resilient AI demand, constrained supply expansion due to lengthy fab construction and HBM material monopolies, and price increases backed by fundamental supply-demand gaps.
While experts generally agree that memory chip prices are still rising and South Korean semiconductor exports show strong resilience, with no significant bubble in the short term, some caution against risks of localized bubbles. If capital expenditures accelerate too rapidly or end-demand falls short of expectations, oversupply could reemerge in the next two years. The memory industry should be viewed as in a high-growth phase rather than an indefinitely rising cycle.
Looking ahead, several foreign institutions are optimistic about South Korean equities. J.P. Morgan expects the KOSPI to reach 7,500 points within the year, a more than 41% increase from current levels. Goldman Sachs has raised its target for the KOSPI from 7,000 to 8,000 points.
In the medium to long term, the KOSPI is expected to trend upward with fluctuations. Whether it can reach 8,000 points depends on three conditions: sustained earnings delivery, avoidance of significant Korean won depreciation, and a broadening of the rally beyond the "chip duo" to a market-wide profit recovery. Without these factors, even if the index hits 8,000 points, it may struggle to stabilize.
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