South Korea has leapfrogged India to develop into the world’s sixth largest share market, leaving fairness markets within the UK, Germany and France trailing in its mud. However regardless of the runaway success, some are elevating considerations that the Kospi index is just too depending on two freshly minted trillion-dollar chipmaking corporations.
Chip firm SK Hynix final week claimed a seat in Asia’s trillion-dollar firm membership, alongside South Korean compatriot Samsung Electronics and Taiwan’s TSMC. Explosive demand for chips utilized in AI has propelled the trio previous the valuation threshold.
SK Hynix’s share worth has skyrocketed 1,000% over the previous 12 months, whereas Samsung has soared 500%. Off the again of the beautiful rise of those chipmakers, South Korea’s inventory market has skilled blistering development since late 2025, shattering document after document.
The Kospi index hit an all-time excessive of 8,880 this week, capping a 220% rise in 12 months. Goldman Sachs have predicted additional good points. It has raised their 12-month Kospi goal to 9,000, in what the funding financial institution referred to as a “once-in-a-generation surge” in semiconductor earnings. In a reshuffle of the worldwide pecking order, South Korea and Taiwan’s inventory markets have vaulted over India.
“I’m watching it in Seoul, and I nonetheless need to hold pinching myself,” says Peter Kim, world funding strategist at KB Securities, as South Korea turned the primary nation apart from the US to have multiple firm value not less than $1tn. “Definitely Koreans are enthusiastic about it.”
Japan, too, is using excessive on the AI increase.
Tokyo’s Nikkei 225 index notched an all-time excessive on Monday as buyers continued to climb into AI and semiconductor-related shares. Amid the cash strikes, the automotive behemoth Toyota misplaced its crown as Japan’s most useful listed firm, toppled by SoftBank Group, an funding firm closely centered on AI tech.
Kim says a “dramatic shift” is beneath means. After 20 years of funding in platforms resembling Alphabet, Amazon and Meta, turning tech begin ups into among the greatest corporations on the planet, the cash is transferring to the {hardware} aspect.
Till just lately, chipmakers had restricted funding enchantment, Kim says, with corporations producing “a reasonably flat and unexciting demand outlook”. However the rise of AI and its huge thirst for chips has created an “superb reversion”.
Nvidia, the world’s first $5tn firm, sits on the centre of the AI ecosystem. Manufacturing of its chips are outsourced to TSMC in Taiwan, which turned the primary firm in Asia to hit the $1tn mark.
Nvidia’s CEO Jensen Huang flew into Taiwan on the finish of Might and made quite a few bullish declarations – together with plans to take a position $150bn a 12 months in Taiwan, which he views because the “epicentre” of the AI revolution.
“Taiwan is booming,” Huang stated. “That is the place the chips come, packaging comes, that is the place the programs are made, that is the place AI supercomputers have been created.” Whereas in Taipei, Huang met with high South Korean tech executives, and he is because of fly to South Korea this week.
However the fast rise of tech shares has raised considerations about an AI bubble.
AI has a voracious demand for reminiscence chips – which serve a special operate to Nvidia’s superior chips. The three corporations assembly that demand are Samsung, SK Hynix and the US chipmaker Micron, itself a latest addition to the $1tn membership.
Russ Mould, the funding director at AJ Bell, cautions the share worth charts of these three chipmakers bear similarities to some corporations in 2000, simply because the tech bubble was on the point of burst.
The chip sector has a popularity for volatility and boom-bust cycles. However Mould argues these cycles are behind us, “because of demand from AI”.
Kim agrees. He says demand, for now not less than, seems underpinned by Meta, Amazon, Alphabet, Microsoft, a gaggle he labels “the AI hyperscalers”, who’ve “a lot money” and “a lot dedication into this AI enterprise”.
However Kim says his agency’s analysis signifies Samsung and SK Hynix have contributed as much as 70% of the Kospi’s development in 2026. The polarisation of South Korea’s bull market is unprecedented, he says.
Such focus does go away the Kospi extremely uncovered to the worldwide AI spending cycle or provide chain points.
Ipek Ozkardeskaya, a senior analyst at Swissquote, famous the Kospi’s VIX, a volatility index, hit “an exceptionally excessive stage” of 75 this week – traditionally, the index hovers about 20, she wrote in a market be aware.
It’s uncommon because the VIX usually rises throughout heavy selloffs on fairness markets – not when they’re rising, Ozkardeskaya stated.
“The spike within the VIX, alongside the Kospi’s historic rally, exhibits that buyers immediately are moderately shopping for in panic, scared to overlook out on one thing large.”
Kim says one other change is blowing via world markets. Conventional institutional buyers have lengthy believed the US has crucial, smartest, and largest corporations, he says, and that “Asia is there to only decide up the scraps”.
“I really feel that sentiment has turned.”
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