[News Today] KOSPI breaks 7,000 on chip rally

[LEAD]

The KOSPI has crossed the 7,000 mark, powered largely by Samsung Electronics and SK hynix.

The two semiconductor giants have surged more than 90 percent this year, far outpacing the rest of the market. With expectations of stronger earnings ahead, major security firms are now raising their KOSPI forecasts.

[REPORT]

Samsung Electronics and SK hynix account for nearly half of KOSPI's market capitalization.

Over the first four months of this year, the average stock price increase of the two companies was around 90 percent.

Other stocks have gained just 20 percent on average.

The sharp market rally is, in effect, being driven by these two companies.

Samsung Electronics also joined the one trillion dollar market cap club, rising to eleventh place in the global market capitalization rankings.

Yang Chang-un / KB Kookmin Bank

Easing concerns over the U.S.-Iran war and stronger chip earnings are seen as sharply lifting the domestic stock market.

A series of upward revisions have been released for the KOSPI's market outlook.

Earlier this year, securities companies predicted that the main bourse would rise to 5,000 to 6,000 points.

Within a few months, they revised it to around 8,000, with the most bullish forecasts reaching 8,600.

The rapid increase in earnings forecasts for Samsung Electronics and SK hynix has forced a swift revision of the overall market outlook.

However, this heavy dependence on specific companies also raises the risk of volatility.

In fact, concerns over overheating driven by reliance on these two stocks have grown among investors, pushing Korea’s fear index VKOSPI to its highest level in over a month.

It is also paradoxical that a bullish stock market solely driven by a rally in chip stocks can necessarily mean a thriving real economy.