South Korea has leapfrogged India to become the world\u2019s sixth largest share market, leaving equity markets in the UK, Germany and France trailing in its dust. But despite the runaway success, some are raising concerns that the Kospi index is too dependent on two freshly minted trillion-dollar chipmaking companies.<\/p>\n
Chip company SK Hynix last week claimed a seat in Asia\u2019s trillion-dollar company club, alongside South Korean compatriot Samsung Electronics and Taiwan\u2019s TSMC. Explosive demand for chips used in AI<\/a> has propelled the trio past the valuation threshold.<\/p>\n SK Hynix\u2019s share price has skyrocketed 1,000% over the past year, while Samsung has soared 500%. Off the back of the stunning rise of these chipmakers, South Korea<\/a>\u2019s stock market has experienced blistering growth since late 2025, shattering record after record.<\/p>\n The Kospi index hit an all-time high of 8,880 this week, capping a 220% rise in 12 months. Goldman Sachs have predicted further gains. It has raised their 12-month Kospi target to 9,000, in what the investment bank called a \u201conce-in-a-generation surge\u201d in semiconductor earnings. In a reshuffle of the global pecking order, South Korea and Taiwan\u2019s stock markets have vaulted over India.<\/p>\n \u201cI\u2019m watching it in Seoul, and I still have to keep pinching myself,\u201d says Peter Kim, global investment strategist at KB Securities, as South Korea became the first country other than the US to have more than one \u200bcompany worth at least $1tn. \u201cCertainly Koreans are excited about it.\u201d<\/p>\n Japan, too, is riding high on the AI boom.<\/p>\n Tokyo\u2019s Nikkei 225 index notched an all-time high on Monday as investors continued to climb into AI and semiconductor-related shares. Amid the money moves, the automotive behemoth Toyota lost its crown as Japan\u2019s most valuable listed company, toppled by SoftBank Group, an investment company heavily focused on AI tech.<\/p>\n Kim says a \u201cdramatic shift\u201d is under way. After 20 years of investment in platforms such as Alphabet, Amazon and Meta, turning tech start ups into some of the biggest companies on the planet, the money is moving to the hardware side.<\/p>\n Until recently, chipmakers had limited investment appeal, Kim says, with companies producing \u201ca fairly flat and unexciting demand outlook\u201d. But the rise of AI and its massive thirst for chips has created an \u201camazing reversion\u201d.<\/p>\n Nvidia, the world\u2019s first $5tn company, sits at the centre of the AI ecosystem<\/a>. Production of its chips are outsourced to TSMC in Taiwan<\/a>, which became the first company in Asia to hit the $1tn mark.<\/p>\n The Nvidia CEO, Jensen Huang, attracts a crowd outside the SK Hynix booth at the annual Computex event in Taipei, on 2 June. Huang will reportedly visit South Korea next. Photograph: Ann Wang\/Reuters<\/p>\n Nvidia\u2019s CEO Jensen Huang flew into Taiwan at the end of May and made a number of bullish declarations \u2013 including plans to invest $150bn a year in Taiwan, which he views as the \u201cepicentre\u201d of the AI revolution.<\/p>\n \u201cTaiwan is booming,\u201d Huang said. \u201cThis is where the chips come, \u200bpackaging comes, this is where the systems are made, this is where AI supercomputers were created.\u201d While in Taipei, Huang met with top South Korean tech executives, and he is due to fly to South Korea this week.<\/p>\n But the rapid rise of tech stocks has raised concerns about an AI bubble.<\/p>\n AI has a voracious demand for memory chips \u2013 which serve a different function to Nvidia\u2019s advanced chips. The three companies meeting that demand are Samsung, SK Hynix and the US chipmaker Micron, itself a recent addition to the $1tn club.<\/p>\n Russ Mould, the investment director at AJ Bell, cautions the share price charts of those three chipmakers bear similarities to some companies in 2000, just as the tech bubble was getting ready to burst.<\/p>\n The chip sector has a reputation for volatility and boom-bust cycles. But Mould argues those cycles are behind us, \u201cthanks to demand from AI\u201d.<\/p>\n Kim agrees. He says demand, for now at least, appears underpinned by Meta, Amazon, Alphabet, Microsoft, a group he labels \u201cthe AI hyperscalers\u201d, who have \u201cso much cash\u201d and \u201cso much commitment into this AI venture\u201d.<\/p>\n But Kim says his firm\u2019s research indicates Samsung and SK Hynix have contributed up to 70% of the Kospi\u2019s growth in 2026. The polarisation of South Korea\u2019s bull market is unprecedented, he says.<\/p>\n Such concentration does leave the Kospi highly exposed to the global AI spending cycle or supply chain issues.<\/p>\n Ipek Ozkardeskaya, a senior analyst at Swissquote, noted the Kospi\u2019s VIX, a volatility index, hit \u201can exceptionally high level\u201d of 75 this week \u2013 historically, the index hovers about 20, she wrote in a market note.<\/p>\n It is unusual as the VIX typically rises during heavy selloffs on equity markets \u2013 not when they are rising, Ozkardeskaya said.<\/p>\n \u201cThe spike in the VIX, alongside the Kospi\u2019s historic rally, shows that investors today are rather buying in panic, scared to miss out on something big.\u201d<\/p>\n Kim says another change is blowing through global markets. Traditional institutional investors have long believed the US has the most important, smartest, and biggest companies, he says, and that \u201cAsia is there to just pick up the scraps\u201d.<\/p>\n \u201cI feel that sentiment has turned.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"South Korea has leapfrogged India to become the world\u2019s sixth largest share market, leaving equity markets in the…\n","protected":false},"author":2,"featured_media":618225,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[554,733,4308,86,56,54,55],"class_list":["post-618224","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-technology","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/618224","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=618224"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/618224\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/618225"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=618224"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=618224"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=618224"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}