Sangmi Cha
3 min read
(Bloomberg) — South Korean stocks are on the cusp of surpassing last year’s world-beating 76% gain, even though 2026 is less than five months old.
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The benchmark Kospi surged 6.5% Wednesday to bring this year’s advance to 75%, its eighth daily gain of more than 5% this year, compared with just one such rally in 2025. Overseas investors bought more than $2 billion of Kospi shares for the day, just a fraction below the record seen in October.
All of this enthusiasm boils down to one theme: artificial intelligence. Long disregarded by global investors, Korean companies are now enjoying a re-rating as their technological edge across the AI supply chain makes their products — and stocks — highly sought after.
“There’s still massive upside,” said Chan H. Lee, a managing partner at hedge fund Petra Capital Management in Seoul. “This isn’t just a local Korea story; it’s a global AI memory cycle. Samsung Electronics’ intrinsic value is finally being recognized.”
Memory chipmakers are among the most sought after stocks in the world due to a supply squeeze and expectations they can keep growing regardless of the overall economic cycle. Even after Samsung Electronics Co. and SK Hynix Inc.’s share prices have both more than doubled this year to set a series of record highs, analysts see room for further gains on insatiable demand for their chips and still-low valuations.
The market is also being supported by President Lee Jae Myung’s push to make equities a cornerstone of household wealth, by introducing reforms to strengthen corporate governance and improve shareholder returns. While the war in Iran has added risks for some sectors due to higher oil prices, the conflict has also renewed focus on the global competitiveness that Korean shipbuilders and defense firms have quietly accumulated.
Still, while there has been a confluence of positive factors, there are also growing concerns the rally is becoming excessive.
The Kospi’s close on Wednesday at 7,384.56 puts it far above the once-unthinkable goal of 5,000 announced by the president during his election campaign last year. The benchmark is also closing in on the seemingly ambitious year-end target of 8,000 set by Goldman Sachs Group Inc. last month. Underscoring the narrow breadth of the rally, more than 600 stocks in the 835-member Kospi dropped on Wednesday despite the surge in the key stock gauge.
