The KOSPI index has finally conquered the 8,000 mark, writing a new chapter in Korea's capitalism. The index, which stayed around 2,500 just a year ago, has more than tripled in a short span, an unprecedented speed that even surpasses the records of Japan's "bubble economy" in the 1980s.
Compared with the Nikkei 225, which took about four years to reach 30,000 after breaking 10,000, the current momentum of the KOSPI is astonishing. While Japan's annual growth rate was in the 40% range at the time, the KOSPI has achieved a 220% gain from its trough in just one year. It is a "lightspeed dash" more than four times faster than Japan.
The undisputed drivers of this frenzy are the two semiconductor leaders. Samsung Electronics, which was in the 50,000 won range a year ago, has broken through the 290,000 won mark despite labor strike risks, delivering a return of more than fivefold. Analysts said a "retaliatory buying" wave expected upon a strike settlement is forming a strong downside support. SK hynix's surge is even more remarkable. Its stock, which was in the 190,000 won range, has topped 1.9 million won on the back of its dominant position in the global High Bandwidth Memory (HBM) market, posting a tenfold jump and becoming the primary engine pulling up the index.
In the securities industry, the view is that the semiconductor export cycle, which drives the domestic economy and stock market, will continue for the time being.
Park Sang-hyun, an analyst at iM Securities, said, "Investment in artificial intelligence (AI) in the United States is stronger than expected, and there is a high possibility that even China will expand AI investment, so Korea's semiconductor export cycle will likely maintain a favorable trend for quite some time," adding, "In particular, a recovery in export momentum to China is likely to have a positive impact on Korea's export cycle."
Lee Kyung-min, an analyst at Daishin Securities, said, "With the strength of the semiconductor sector standing out, the share prices of market-capitalization leaders Samsung Electronics, SK hynix and SK Square jumped 20% to 40% just in May, far outpacing the KOSPI's gain," adding, "They account for 80.4% of the increase in the KOSPI's market capitalization in May, clearly playing the role of leading stocks."
The securities industry assesses that powerful supply-demand dynamics, rather than valuation logic, are dominating the KOSPI market. Not only traditional indicators such as the price-earnings ratio (PER) but also strong buying momentum are acting as forces driving the market.
Kim Dae-jun, an analyst at Korea Investment & Securities Co., explained, "Because semiconductor corporations' earnings are so strong, profits (E), the denominator of the price-earnings ratio (PER), have expanded, easing valuation burdens," adding, "Despite the index's surge, growth in semiconductor profits is supporting it, so investors still view it as a 'market to buy.'"
As the rationale for resolving the Korea discount in the local market collides with unprecedented liquidity, some predict that whether the KOSPI can hold the 8,000 level will ultimately depend on the sustainability of semiconductor earnings and the continuity of inflows.
Analyst Kim Dae-jun said, "For the stock market boom to continue, it is important to be able to give the market confidence that the semiconductor industry can keep growing," adding, "In the case of Samsung Electronics, labor talks are underway, and the stock's trajectory could change depending on whether a deal is reached."