SEOUL: An AI-powered surge in semiconductor shares sent South Korea's benchmark KOSPI index above 7,000 points in a historic first on Wednesday, with Samsung Electronics breaking the $1 trillion market-cap barrier.
The gains underscore how global demand for artificial intelligence hardware has become the dominant force reshaping equity markets, turning South Korea's chip-heavy benchmark into one of the world's best performing major markets.
The KOSPI jumped 6.9% to a record 7,417.54 in afternoon trade, briefly tripping a rare "sidecar" trading curb after a sharp open, as a blistering rally in U.S. chip stocks overnight drove the Philadelphia Semiconductor Index up 4.2%.
Samsung Electronics and SK Hynix leapt more than 10% each to all-time highs, together accounting for 44% of the KOSPI's total value.
Samsung became only the second Asian company after Taiwan Semiconductor Manufacturing Co (TSMC) to crack the trillion-dollar club, and is among just four Asian firms valued at more than $500 billion, along with TSMC, SK Hynix and Tencent .
The broader gains built on a 5.1% rally on Monday, when domestic data showed robust manufacturing activity and trade was led by strong semiconductor demand amid a global rush into AI investment. The market was closed on Tuesday for a public holiday.
So far this year, the KOSPI has climbed 76%, after posting a 76% jump in 2025 - its best annual performance since 1999 - helped by the government's push for market reforms.
"Despite high oil prices and bond yields sparked by Iran war noises, foreign flow conditions are improving on a jump in the Philadelphia Semiconductor Index and AMD shares," said Han Ji-young, an analyst at Kiwoom Securities.
Shares of Advanced Micro Devices surged 12% in extended trading hours on Tuesday after it forecast second-quarter revenue above market expectations, driven by robust demand for its data-center chips as cloud-computing companies accelerate spending on AI infrastructure.
In the currency market, the won rose 1.2% to 1,458.5 per dollar on the onshore settlement platform, hitting its strongest level since April 17.
KOSPI STILL UNDERVALUED?
Broader market sentiment also improved after U.S. President Donald Trump said he would briefly pause an operation to escort ships through the Strait of Hormuz, citing "great progress" toward a comprehensive agreement with Iran, sending oil prices sharply lower in Asian trading.
Beyond tech, securities firms jumped 15% and financial groups rallied 5% on Wednesday on hopes that a stock market boom would lift earnings. They were in a minority of 194 gainers among the total 893 traded shares, while 687 declined.
"South Korea's stock market is still undervalued compared with historical valuations in terms of earnings per share, trading at about nine times this year's earnings forecasts," said Seo Sang-young, an analyst at Mirae Asset Securities.
"If the demand for AI chips continues at this level, the KOSPI could reach 10,000 points by the end of this year - but if the demand collapses with worries over inflation and weak growth due to the Iran war, it could plummet to as low as 4,500 points," Seo said.
The KOSPI, which was trading in the 2,000 range when President Lee Jae Myung took office in early June 2025, breached 3,000 in less than a month, and powered through to top 6,000 in late February just before the Iran war broke out.
"I believe the KOSPI's jump is due to the recovery of capital market confidence in South Korea, which had been undervalued," Jung Cheong-rae, the leader of the ruling Democratic Party, said, crediting it to various government policies.
Foreigners led Wednesday's rally with their net purchase of local shares at 1.7 trillion won. ($1 = 1,457.6300 won) - Reuters
