Samsung, SK Hynix fuel South Korean market surge

South Korea’s benchmark stock index has reached a new milestone just one month after breaking through the 5,000 level, as surging global demand for memory chips fuels gains in the country’s largest semiconductor companies.

The KOSPI climbed as much as 2.6% to a record 6,123 on Wednesday. Shares of Samsung Electronics and SK Hynix each rose more than 2%. With the benchmark now up 45% in 2026, South Korea’s total market capitalization has surpassed France’s, after overtaking Germany’s just last month, News.Az reports, citing Bloomberg.

Long considered undervalued and often overlooked by foreign investors, Korean equities have emerged as standout performers in global markets. The so-called “AI scare trade” has turned into a tailwind for the country, where hardware manufacturers dominate the index and software stocks play a relatively minor role. Corporate governance reforms have also supported the rally, with parliament expected to pass legislation requiring companies to cancel treasury shares.

The latest advance comes amid a broader global technology rally, sparked in part by Meta Platforms reaching a deal to purchase chips and computing equipment from Advanced Micro Devices to power artificial intelligence models.

Investor sentiment has also improved following a decision by the US Supreme Court last week to strike down President Donald Trump’s reciprocal tariffs, a move seen as supportive of export-driven markets such as South Korea. Tiffany Hsiao, portfolio manager at Matthews, said Korean exporters tied to US consumer demand — particularly in electronics and components — stand to benefit from reduced tariff uncertainty.

There are early indications that domestic retail investors, who have historically favored US equities over local shares, are reallocating capital back into Korean markets. If sustained, this shift could provide further momentum for the rally.

In late January, South Korea’s market value overtook Germany’s, and this week it climbed to $3.76 trillion, exceeding France’s despite the country’s smaller economy. Such rapid gains have prompted some observers to watch valuations closely.

Shares of Samsung have nearly quadrupled since the beginning of 2025, while SK Hynix stock has surged six-fold. Despite the sharp run-up, analysts remain broadly optimistic, citing continued benefits from the global memory shortage and sustained AI-driven demand.

Both Citigroup and Macquarie Capital raised their price targets overnight, with Macquarie projecting a 65% upside for Samsung from current levels. Nomura recently lifted its target for the Kospi to as high as 8,000 in the first half of the year, pointing to a memory supercycle, strong earnings across the AI capital expenditure chain and defense sector, and a re-rating of the physical AI supply chain.

Reaching 8,000 will also depend on whether the government follows through on promised reforms to the Commercial Act, South Korea’s primary business law. Proposed revisions — including mandatory cancellation of treasury shares — aim to curb governance practices that critics say have allowed conglomerate owners to strengthen control with limited direct ownership.

News.Az 

By Nijat Babayev