Index triples in a year as market cap tops 6,000 trillion won
Foreign money, retail ‘baby accounts’, and AI chip supercycle drive the rally
The KOSPI closed at a record 7,384.56 on the 6th, up 6.45% on the day, capping a stunning run that took the benchmark from around 2,300 during last year’s political turmoil to above 7,000 in about twelve months. During that time, the index broke through five 1,000‑point thresholds and delivered the strongest performance among major global equity markets. It pushed the combined value of Korean stocks above 6,000 trillion won for the first time, approaching 7,000 trillion won.
The rally has clear global drivers. AI‑related chip demand has made Samsung Electronics and SK Hynix the main engines of the index, with Samsung’s first‑quarter operating profits up more than sevenfold year‑on‑year due to memory shortages and data‑center spending. As U.S. and Chinese big tech groups race to build AI infrastructure, Korea has emerged as a core supplier of high‑end memory and related components. This has drawn in foreign capital that fled during the earlier phase of U.S.–China tensions, emergency rule, and tariff shocks. Net foreign selling during that period has flipped into aggressive buying, helping to re‑rate a market long seen as structurally undervalued.
Domestic participation has shifted dramatically. The number of active stock trading accounts in Korea has climbed past 100 million. Securities firms report a surge in the number of accounts for minors as parents open portfolios for their children focused on Samsung, SK Hynix, and U.S. mega‑cap ETFs. Retail investors who once said “escaping the local market is a sign of intelligence” are now returning to a market many see as structurally improved. This is underpinned by corporate‑governance reforms that mandate or encourage share cancellation, higher dividends, and stronger minority‑shareholder protections.
For global investors, Korea’s appeal remains tied to valuation as much as growth. Even after more than tripling from last year’s lows, KOSPI’s price‑to‑earnings ratio has risen from roughly 12 times to the mid‑20s, keeping it in line with the S&P 500 but with far lower price‑to‑book multiples around the low‑2 range versus more than 5 times for the U.S. benchmark. Strategists argue the “Korea discount” has narrowed but not disappeared, leaving room for further upside if semiconductor earnings upgrades are sustained and spread to banks, industrials, and other cyclicals. At the same time, they caution that the index’s heavy concentration in two chipmakers, lingering geopolitical risks, and the possibility of an AI‑investment slowdown after 2027 could cause sharp swings around this new 7,000‑point regime.
By Min Byung-kwun, KDFN
kdf＠kdfnews.com
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