KOSPI tops 7,000 on chip rally

South Korea’s benchmark KOSPI index has surged past the 7,000 mark, driven by a powerful rally in semiconductor leaders Samsung Electronics and SK hynix. Their gains have pushed total market capitalization to more than triple its level 13 months ago. While investors have embraced the sharp rise, concerns are growing that the market may be nearing a peak, with geopolitical risks adding to the uncertainty.

On May 6, the KOSPI closed at 7,384.56, up 6.5 percent from the previous session. The index first crossed 6,000 on Feb. 25 and reached 7,000 just 70 days later. Semiconductor stocks led the advance, as foreign investors bought shares sold by retail and institutional investors taking profits.

Samsung Electronics jumped 14.6 percent to top 260,000 won, while SK hynix climbed 10.9 percent to surpass 1.6 million won. Samsung Electronics also joined the “$1 trillion market cap club,” becoming the second Asian company after TSMC to reach the milestone.

The rally has been fueled by government-led “value-up” measures and a strong semiconductor upcycle tied to the global shift toward artificial intelligence. So far this year, the KOSPI has risen 75.2 percent, the highest among Group of 20 markets. The price-to-book ratio has climbed above 2 from 0.89 a year earlier, suggesting the long-standing “Korea discount” is easing.

Analysts say the gains reflect strong corporate earnings, led by record semiconductor profits.

Still, the market’s heavy reliance on Samsung Electronics and SK hynix poses a risk. Together, the two stocks now account for more than 40 percent of the index. Demand for memory chips, including high-bandwidth memory, is expected to remain strong, but volatility has increased. Even minor developments, such as delays in overseas AI data center investments, have begun to move the market.

Tensions in the Middle East add another layer of risk. Global oil inventories are tightening, and analysts warn that even if the conflict subsides, a sharp rise in crude prices in June may be difficult to avoid. South Korea’s consumer inflation rate reached 2.6 percent in April, the highest in 21 months. If central banks respond by raising interest rates, equities could come under pressure, as higher borrowing costs tend to weigh on stock markets.

The rally has lifted sentiment, but analysts say investors should remain cautious and prepare for heightened volatility.