On Wednesday the KOSPI, South Korea's benchmark stock index, surpassed the 7,000 point mark for the first time and closed the trading day at 7,384.56 points after a 6.45 percent gain. During the session the index reached an intraday high of 7,426.66 points, up 7.06 percent.
What's behind the rally?
The surge on the Korean market has been fuelled by strong global demand for memory chips used in artificial intelligence systems. As a result, two South Korean chipmakers—Samsung Electronics and SK Hynix—entered the list of the world's 20 most valuable publicly traded companies. Reuters notes that no European, Chinese or Japanese firm currently sits in that top 20 (ASML is 21st and Tencent 22nd).
Samsung passes $1 trillion market capitalization
Samsung Electronics' market value crossed the $1,000 billion mark, making it the second Asian company after Taiwan's TSMC to reach that milestone. The group of Asian companies worth at least $500 billion now contains five members: TSMC, Samsung Electronics, Saudi Aramco, SK Hynix and Tencent.
Stock moves and index concentration
On Wednesday Samsung's shares rose 14.4 percent and SK Hynix's rose 10.6 percent. Together those two companies represent about 44 percent of the KOSPI's market capitalization, even though the index comprises nearly one thousand constituents.
Market context and external factors
The KOSPI has gained more than 70 percent so far this year, after a 76 percent rise last year—the best annual performance for the Korean market since 1999. The rally continued despite geopolitical tensions in Iran and rising oil and gas prices, although South Korea imports significant energy from the Middle East.
Reuters cites Han Ji‑jong, an analyst at Kiwoom Securities, who says foreign funds' inflows helped offset the effect of higher oil prices and bond yields. The upswing in the Philadelphia Semiconductor index and a jump in AMD shares also supported sentiment; AMD stock rose 12 percent after market close following guidance pointing to higher‑than‑expected second‑quarter revenue.
These developments suggest persistent demand for AI infrastructure, which benefits Korean memory manufacturers.
Risks and valuation
Despite the dramatic rally, some analysts still view the KOSPI as undervalued: current prices trade at roughly nine times this year's expected corporate earnings. Continued strength, however, depends on sustained demand for memory chips—an industry that has historically been highly cyclical, although many market participants believe AI could alter that dynamic.
