South Korean stocks just enjoyed their second-best month ever - and now the market is bigger than the U.K.

MW South Korean stocks just enjoyed their second-best month ever - and now the market is bigger than the U.K.

By Jules Rimmer

The KOSPI index notched up another all-time high intraday before closing lower on Thursday

South Korean stocks rallied in April, after a difficult March following the start of the Iran war.

South Korean stocks just registered their second best month ever and has overtaken one of the largest stock markets in the world.

The Kospi Composite jumped 31% in April, according to FactSet, the best month since Jan. 1998 when it received an International Monetary Fund bailout.

The gains have propelled it to the eighth largest in the world by market capitalization, having just overtaken the U.K., according to Bloomberg calculations. The combined market cap for South Korean companies stands at $4.2 trillion vs. $3.9 trillion for the U.K., according to FactSet data.

This time around, South Korean stocks are building on top of strong gains rather than recovering from depths. The Kospi index KR:180721 is now up 57% this year.

The U.S.-listed MSCI Korea ETF EWY has gained 58% this year. The iShares MSCI United Kingdom ETF EWU, which is almost completely devoid of tech stocks, is up a pedestrian 5% this year.

Ivo Kovachev, senior fund manager at JO Hambro and responsible for its emerging market fund with co-manager Emery Brewer, explained to MarketWatch that the two index heavyweights, Samsung Electronics (KR:005930) and SK Hynix (KR:000660) continue to do extremely well due to the imbalance in the memory market where the high demand pull from AI-related spend continues to outstrip supply.

Moreover, those tight market conditions apply to both high-end memory chips and the more traditional dynamic random access memory, or DRAM, chips.

"There have been additional levers in South Korea," Kovachev continues. "Let's not forget the initiative launched by the government in the last few years, the so-called 'value-up program' that sought to incentivize the previously notorious chaebols (large Korean conglomerates) to adopt better corporate governance practices and treat minority shareholders more fairly."

Interestingly, Kovachev adds that in recent months, he and Brewer have invested in some second-tier stocks, energy plays designed to benefit from the value chain created by AI demand and the urgent requirement for energy sources from data centers.

This list might include names like HD Hyundai Electric (KR:267260), Hyosung Heavy Industries (KR:298040), LS ELectric (KR:010120) and Unison (KR:018000).

For most investors, however, it is the semiconductor theme that's dominated. In the month of April, strength in SK Hynix and Samsung Electronics reflected, and even outpaced, the breathtaking surge in the Philadelphia Semiconductor Index SOX that rallied by a third on insatiable demand for the buildout of the AI ecosystem. SK Hynix added 54% in the last four weeks and Samsung Electronics 37%.

The rally in Korea is a vindication of the call made by Goldman Sachs strategist Tim Moe in the face of a major sell-off at the start of March.

Moe's overweight recommendation on Korea cited earnings growth, corporate reform, a trade surplus, an improving currency and investor positioning as key locomotives for the KOSPI index and these all played a part in the recent jump.

-Jules Rimmer

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 30, 2026 08:29 ET (12:29 GMT)

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