As the Kospi index set an all-time high, the gain topped 50% from the year's low. But more than one-third of the rise turned out to be attributable to Samsung Electronics and SK hynix. Investors without the two stocks in their brokerage accounts found themselves relatively left out.
According to the Korea Exchange on the 25th, the Kospi index finished the previous day up 17.54 points (0.51%) at 3,486.19. It climbed as high as 3,494.49 intraday, once again setting an all-time record.
On Apr. 9 this year, the Kospi index fell to as low as 2,284.72 intraday on the U.S. administration of Donald Trump's "tariff shock," then rebounded. As of the previous day, it was up 52.6%. Even compared with the year-end closing of 2,399.49, the rise is 45.3%. At the current pace, it is on track for the best year since 2009, the year after the global financial crisis, when the annual gain was 49.7%.
However, because the Kospi index is weighted by market capitalization, Samsung Electronics and SK hynix, the No. 1 and No. 2 by market cap, have a big impact. The total market capitalization of Kospi-listed companies rose from the 4/9 low of 1,880.1727 trillion won to 2,855.4883 trillion won on the 22nd, an increase of 975.3156 trillion won.
Based on the increase in market capitalization by stock over the same period, Samsung Electronics contributed 20.4% (including preferred shares) to the Kospi index, and SK hynix 13.9%. The two accounted for 34.3%. If you include the contributions of Samsung Life Insurance, Samsung C&T, and SK Square, which are closely linked to the share prices of Samsung Electronics and SK hynix, the figure approaches 40%.
▲Doosan Enerbility 2.8% ▲Hanwha Aerospace 2.2% ▲HD Hyundai Heavy Industries 1.9% ▲KB Financial Group 1.7%—even stocks cited as leaders have limited weight in terms of index contribution.
The concentration is even more pronounced in terms of foreign flows. As of the 22nd, foreigners turned net buyers for the year in the Kospi market. But excluding the two stocks, the cumulative net purchases are 3.609 trillion won for SK hynix and 2.434 trillion won for Samsung Electronics, and foreigners remain net sellers by more than 6 trillion won.
In particular, as funds flocked to Samsung Electronics and SK hynix, Doosan Enerbility's share price has fallen more than 10% from its high, and HD Hyundai Heavy Industries and KB Financial Group are also down around 8%. As a result, while the Kospi index was hitting all-time highs, accounts that did not hold Samsung Electronics and SK hynix could actually have seen worse returns.
As domestic and overseas securities firms issue upbeat outlooks for the memory chip cycle, the concentration could continue for the time being. Citigroup said the average selling price (ASP) of DRAM and NAND flash in 2026 will rise 24.8% and 22.9%, respectively, from this year. It raised its prior estimates by 9.3 percentage points and 5.8 percentage points.
However, with leading sectors often rotating in a bull market, many say to use pullbacks as opportunities rather than chase momentum. Notably, according to Bloomberg, Samsung Electronics has only about 5% upside to its 12-month target price, and SK hynix is actually below 1%.
Lee Su-jeong, an analyst at Meritz Securities, said, "After target prices were raised sharply to widen the narrowed upside in 2018 and 2019, share prices began to drift lower."