South Korea's stock benchmark advanced to cross the 5,000 target set by President Lee Jae Myung, fueled by AI‑driven demand in the tech‑heavy market.
The Kospi Index climbed as much as 2.2% to 5,019.54, lifted by gains in Samsung Electronics Co., and SK Hynix Inc. The gauge has gained over 95% in the past 12 months, making it the world's best-performing index.
The rally highlights Korea's shift from a cyclical export market to a core beneficiary of the global AI boom, thanks to its dominance in memory chips critical for data centers. The latest leg higher in Samsung Electronics and SK Hynix came after Nvidia CEO Jensen Huang said multitrillion‑dollar investments are needed to build global AI infrastructure. Crossing 5,000 also marks a political milestone, reinforcing President Lee's pledge to tackle governance shortcomings that have long weighed on valuations.
“This is only the start,” said Kang DaeKwun, chief investment officer at Life Asset Management in Seoul, forecasting that Kospi could hit 6,000 in two months. “Kospi is not seeing a re-rating yet. It's just normalization. I don't think 5,000 is an excessively high level.”
Thursday's rally would put South Korea's market cap — at around $3 trillion in the previous session — close to Germany's at $3.1 trillion. It's also rapidly closing in on Taiwan, where Taiwan Semiconductor Manufacturing Co.'s dominance in chips has driven valuation higher.
Korea's benchmark rose in all but one session in January, eking out gains earlier this week even as US President Donald Trump escalated his rhetoric over Greenland and threatened tariffs. Thursday's gain was part of a regional relief rally after Trump announced a “framework” deal with NATO regarding Greenland. The MSCI Asia Pacific Index advanced as much as 1.1%.
Meeting with reporters this week, President Lee emphasized that he's not trying to artificially inflate stock prices but to normalize the market. He added that investments should be made responsibly. He plans to hold a luncheon meeting with the parliament's Kospi 5000 special committee members on Thursday, according to local media.
Korea Discount
Bulls argue the Kospi's rally still has room to run until the so-called “Korea discount” — the perennial valuation markdown tied to weak corporate governance — fades.
Even at a record-high level, Kospi's valuation trails regional peers on key measures. The index trades at roughly 1.6 times price‑to‑book, below that of MSCI's emerging market benchmark and Taiwan's Taiex.
Jeong Eun Bo, chief executive officer at the Korea Exchange, said Kospi can reach 6,000, given local industries' competitive edge and efforts to improve shareholder returns.
Market watchers remain upbeat. Goldman Sachs Group Inc. projects a 23% return for Korean equities this year in dollar terms, underpinned by 53% earnings growth and a favorable macro environment.
The global memory chip shortage is a major tailwind. Samsung Electronics' quarterly profit more than tripled to a record as soaring demand for AI servers drove memory prices higher.
The supply-demand dynamics for memory chips will likely stay “imbalanced” through 2027, as manufacturers stay cautious about capex and new capacity, said Mixo Das, head of Korea equity strategy at JPMorgan Chase & Co. With supply tight, “there's still more upside,” he said.
Such rapid gains, however, can be vulnerable to sudden selloffs if profit-taking pressures mount. The rally has been driven by a narrow pool of buyers, with net purchases limited to local institutional investors.
Retail investor sentiment is more subdued than during the post‑pandemic peak of 2021, when mom‑and‑pop traders drove markets higher. This time, they have instead funneled money into US stocks, contributing to the won's weakness and creating a decoupling with domestic stocks that is unsettling policymakers.
In a sign of limited positive spillover into the real economy, gross domestic product shrank in the final quarter of 2025. The country's tricky balancing act between the US and China also leaves it in the crosshairs of global tariff tensions.
Still, optimism over structural improvements in the stock market is difficult to dismiss.
The government-led “Value-Up” campaign to boost shareholder returns is underway, while trading-hour expansion plans in both equities and currency are also stirring expectations of greater liquidity. The efforts may put the country closer to clinching an upgrade to developed market status by MSCI Inc.
Legislative momentum is also building. Recent revisions to commercial law strengthened board accountability and enhanced shareholders' oversight of directors. Next on parliament's agenda is a bill mandating the cancellation of treasury shares, which should reduce supply overhang and improve capital efficiency.
“Korean markets have historically been an overlooked market, trading at a significant discount, and sustained reform progress, combined with effective execution, could support further market re-rating,” said Sojung Park, a portfolio manager at Matthews International Capital Management.
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