Even though 2026 is not yet halfway through, South Korea’s stock market capitalization has surged 71% this year to $4.59 trillion, officially surpassing Canada; the country’s benchmark index has jumped 75%, with Samsung Electronics and SK Hynix doubling in value as the top contributors.
Artificial intelligence-driven demand for semiconductors is reshaping the global capital markets. According to Bloomberg data, South Korea’s total stock market capitalization surged this year to $4.59 trillion, a 71% increase, surpassing Canada’s market, which grew about 7% to $4.5 trillion, and rising to seventh place globally.
This change is closely tied to market structure. Both Samsung Electronics and SK Hynix have surpassed a $1 trillion market capitalization, with their stock prices more than doubling this year. Their dominant position in the AI chip sector has driven simultaneous growth in product demand and capital interest, directly contributing to the expansion of Korea’s overall market size.
Because these two companies account for a combined 45% weight in the benchmark index, the semiconductor sector nearly determines the performance of the Korean stock market. Driven by this, Korea’s market capitalization has not only surpassed Canada’s but also overtaken major European markets such as the UK and France. In contrast, Canada’s S&P/TSX Composite Index, which is dominated by energy and financial sectors, has risen only about 7% year-to-date, while Korea’s KOSPI has surged more than 70% over the same period.
Ha Seok-Keun, Chief Investment Officer at Eugene Asset Management, noted that the Korean market still has room for expansion, driven by an AI-dominated memory chip cycle, while Canada’s growth potential is relatively constrained due to its industry structure being concentrated in energy and finance.
Semiconductors lead the market, with capital concentrated driving the index higher.
Entering 2026, South Korea’s stock market momentum has accelerated further. Even though the year is not yet halfway through, the Kospi index has gained 75% year-to-date, nearing the global-leading 76% annual gain recorded in 2025. On Wednesday alone, the index rose 6.5%, and there have already been eight trading days this year with single-day gains exceeding 5%—far surpassing the single such day recorded throughout all of 2025.
Overseas funds are also accelerating their inflows. On that day, foreign investors net purchased over $2 billion in Kospi stocks, approaching the historical high set in October last year.
Market enthusiasm is concentrated on the artificial intelligence theme. Korean companies, long overlooked by some international investors, are seeing their valuations rise again due to their technological advantages within the AI supply chain. Chan H. Lee, managing partner at Seoul-based hedge fund Petra Capital Management, said:
This is not just a local story in Korea, but a global cycle in AI storage chips. Samsung Electronics' intrinsic value has finally been recognized.
Amid tight supply and sustained demand growth, memory chip companies have become core assets sought after by global capital. Although Samsung Electronics and SK Hynix have repeatedly hit all-time high stock prices, analysts believe there is still upside potential, as demand has not yet been fully met and valuations remain relatively low.
From a valuation perspective, South Korea’s leading companies remain attractive. In terms of forward P/E ratios, Samsung Electronics is around 6x, and SK Hynix is approximately 5.3x, significantly lower than NVIDIA’s (NVDA) 22x. Meanwhile, the market expects earnings for Kospi constituents to grow by over 200% over the next 12 months, providing fundamental support for the current rally.
Policy and cycle are aligning, but risks are beginning to emerge.
The policy environment is also strengthening market performance. President Yoon Suk Yeol of South Korea is advancing corporate governance reforms and enhancing shareholder returns, aiming to make stock investment a key component of household wealth. Additionally, while the war in Iran has pushed up energy prices and pressured certain industries, it has also increased attention on South Korea’s shipbuilding and defense companies, whose long-standing competitive advantages are being reevaluated.
However, imbalances within the market structure are beginning to raise concerns. The Kospi index closed Wednesday at 7,384.56 points, significantly above the 5,000-point target proposed by Lee Jae-myung during his campaign and gradually approaching Goldman Sachs’ revised year-end forecast of 8,000 points set last month. Yet, among the 835 constituent stocks, more than 600 declined on the day, indicating that the upward momentum was highly concentrated among a few large-cap stocks.
Ihor Dusaniwsky, Head of Predictive Analytics at S3 Partners, noted in a client report released this month that short-selling pressure is increasing following such a rapid rally, raising expectations of a market correction.
Jung In Yun, CEO of Fibonacci Asset Management Global, also expressed a similar cautious stance: "From now on, I will also be cautious, as the macroeconomic backdrop is no longer entirely favorable."
He noted that the market's reliance on continued earnings upgrades for a few leading semiconductor companies is deepening, and that the current highly concentrated rally could lead to accelerated volatility if global liquidity tightens or expectations around AI investment become more rational.
However, from the perspective of profitability and industry cycles, most institutions still believe that the supporting factors have not disappeared. Stanley Tang, Senior Portfolio Manager at Sumitomo Mitsui DS Asset Management, said: “Driven by strong demand for artificial intelligence, storage chip companies are enjoying historically high profits, while shipbuilders are benefiting from an upswing in the shipping cycle and lower steel costs.”