Cailian Press, February 25 (Editor: Xiaoxiang) $Korea Composite Index (.KOSPI.KR)$ Only one month after surpassing the once unimaginable 5,000-point threshold, another milestone was achieved—reaching the 6,000-point mark for the first time on Wednesday. This was primarily driven by a global surge in demand for memory chips, which boosted the share prices of South Korea’s two leading chip giants, Samsung Electronics and SK Hynix.

Market data showed that the KOSPI index rose more than 2% during the day, hitting a record high of 6,144.71 points intraday. With the benchmark KOSPI index having accumulated an increase of nearly 45% since 2026, it has become the best-performing major market globally.

Note: Orange represents the KOSPI index trend.

According to industry data, the market capitalization of South Korea’s stock market has now reached over 3.76 trillion US dollars, having risen approximately 2.23 trillion US dollars cumulatively since the beginning of 2025. Currently, the market capitalization of South Korea’s stock market has surpassed that of France, rising to ninth place globally. Earlier, at the end of January, South Korea’s stock market surpassed Germany’s to historically enter the top ten global markets.

Note: In the above chart, black represents the market capitalization of South Korea’s stock market, orange represents the market capitalization of Germany’s stock market, and gray represents Bloomberg’s valuation of France’s stock exchange; in the chart below, from highest to lowest are the GDP scales of Germany, South Korea, and France respectively.

Analysts pointed out that despite being long neglected by foreign funds due to persistently low valuations, South Korea’s stock market has now become an increasingly shining star in the global market. The so-called ‘AI panic trading’ has proven beneficial to the country’s stock market, as software stocks play only a secondary role in South Korea’s market, while hardware manufacturers continue to drive the market higher.

Corporate governance reforms have also contributed to the rise of South Korean stocks. It is expected that the South Korean National Assembly will pass a bill later on Wednesday requiring companies to cancel treasury shares. Treasury shares refer to the company’s own shares repurchased from the open market, which in many markets are typically viewed as temporary tools and eventually canceled to enhance shareholder returns. However, in South Korea, they are often held indefinitely.

The ruling last week by the U.S. Supreme Court overturning President Trump’s retaliatory tariffs has also been seen as a boost to South Korea’s stock market this week.

Tiffany Hsiao, portfolio manager at Matthews, expects that South Korean exporters linked to U.S. consumer demand – particularly in the electronics and components sectors – will benefit from reduced tariff uncertainty.

Jung In Yun, CEO of Fibonacci Asset Management Global, stated, ‘As the KOSPI reaches 6000 points, further upside may become more gradual. Its sustainability will depend on earnings delivery and whether the market can broaden out from a few heavily-weighted semiconductor stocks. Without such support, some sector rotation or consolidation would not be surprising.’

Can the strong momentum continue?

Currently, there are early signs that South Korean retail investors, who traditionally favor U.S. equities over domestic stocks, are returning to the local market. If this shift persists, it could drive the next wave of gains.

Of course, given the rapid rise in the South Korean stock market over the past few months, some market observers are closely monitoring its valuation levels.

Matthew Haupt, portfolio manager at Wilson Asset Management, said, ‘I considered buying KOSPI futures, but given the index’s relative gains over the past month, initiating a new long position is a tough decision.’

Since the beginning of 2025, Samsung’s share price has surged nearly fourfold, while SK Hynix’s stock has skyrocketed by approximately six times.

However, most analysts remain broadly optimistic, citing that the two leading South Korean chipmakers are likely to continue benefiting from ongoing memory chip shortages and AI-driven demand.

This week, Citigroup and Macquarie Capital both raised their target prices for the two South Korean chip giants. Notably, Macquarie’s forecast for Samsung Electronics implies a potential 65% upside from current levels.

On the broader market, Nomura Securities recently raised its mid-year target for the KOSPI to 8000 points, citing factors such as a memory supercycle, robust profitability in AI-related capital expenditure chains and defense sectors, and a revaluation of the physical AI supply chain.

Nomura Securities analysts Cindy Park and Dongmin Lee wrote in their report, “If South Korea can accelerate its corporate value reform and structural improvements in the KOSDAQ market, we expect valuations to be further reshaped to above 8000 points.” Park and Lee noted that the path to 8000 points also depends on whether the South Korean government can deliver on its promised reforms by revising the Korean Commercial Code multiple times.

Editor/Rice