On the 6th, when the KOSPI index topped 7,000 points for the first time ever, Samsung Electronics' market capitalization also surpassed $1 trillion (1,500 trillion won) for the first time. Among Asian corporations, Samsung Electronics is the second to reach a $1 trillion market cap after Taiwan's TSMC.
In the industry, Samsung Electronics' share-price trajectory is seen as a symbolic case that goes beyond the strength of a single stock to showcase the KOSPI index's rally this year, in which it has successively broken through 5,000, 6,000, and 7,000 points.
Samsung Electronics' stock price surged as profits rose with the expansion of the artificial intelligence (AI) value chain and as it resolved a chronic undervaluation (discount), drawing in household, pension fund, and foreign capital at the same time. The KOSPI index is likewise in a phase of resolving undervaluation, backed by a sharp increase in listed companies' profits as the global AI ecosystem expands and aided by the government's market-boosting policies.
The strongest recent driver of the KOSPI index's gains is expectations for earnings improvement at listed companies as the AI industry spreads.
Earnings estimates for domestic listed companies continue to be revised higher. According to the securities industry, the "12-month forward PER," which means the current share price divided by the forecast net profit corporations will earn over the next year, stands at 7.18 times, lower than during the past COVID-19 pandemic (7.52 times) or in 2018 (7.62 times), when the U.S.-China trade dispute overlapped with a semiconductor slump.
This is thanks to a significant improvement in earnings at domestic listed companies related to memory semiconductors, power, power generation (nuclear power, SMR, engines, renewables), and storage (ESS) in a phase of expanding global AI investment.
Strategists at Goldman Sachs, who projected that the KOSPI index could rise to 8,000 points this year, said, "In Korea's stock market, there are quite a few companies that have entered AI-related fields such as robots, energy equipment, and nuclear power in addition to the semiconductor industry," adding, "The defense and shipbuilding sectors, which are expected to benefit from the United States' reindustrialization efforts, are also noteworthy."
As expectations for earnings improvement grow, overseas investors' views toward the Korean stock market are changing. Global asset manager Franklin Templeton, in a Korean equity market analysis report released last month, noted, "Korea has structural strengths in the process of building global AI infrastructure." It said Korea has overwhelming competitiveness in High Bandwidth Memory (HBM), which is essential for the expansion of the AI industry, and that Korea's traditional strengths—capital intensity, manufacturing capability, and engineering scale—are being reevaluated.
If rising profits at listed companies have strengthened the fundamentals of Korea's stock market, then on the supply-demand side, policy changes have served as a decisive turning point. The government's strong market-activation measures to resolve the chronic "Korea discount" have opened the floodgates for capital inflows, analysts say.
Amid expectations for institutional reforms centered on amendments to the Commercial Act, households' spare funds and retirement pensions have begun moving from safe assets such as deposits and savings into the stock market. Institutional funds such as pension funds are also supporting the domestic market, and foreign inflows have joined in.
Recently, "overseas retail investors" also gained a direct path to invest in Korea's stock market. As the government eased regulations to allow omnibus accounts for foreigners, overseas individual investors can now invest directly in Korean stocks without cumbersome procedures.
Lee Jae-won, a researcher at Yuanta Securities Korea, said, "U.S. online broker Interactive Brokers (IBKR) launched a service this week that allows direct purchases of Korean stocks through Samsung Securities," adding, "The reason Samsung Securities ranked among the top buy desks for SK hynix and Samsung Electronics is the inflow of overseas retail investor funds."
Goldman Sachs analyzed, "Korea is continually pursuing improvements in corporate governance, and this can enhance shareholder returns and provide investment opportunities."
However, it is not all optimism. Franklin Templeton assessed that while the government-led push to improve governance and strengthen shareholder returns is helping to alleviate the market discount, it is premature to say that Korea's stock market is being fully re-rated.
Franklin Templeton advised, "Beyond the implementation of policies designed by the government, it is necessary to verify whether companies are actively executing and consistently carrying out governance improvements and expanded shareholder returns."