KOSPI breaks 7,000 milestone as chip rally fuels market surge

Employees celebrate at the dealing room of Hana Bank in Seoul, Wednesday, as the KOSPI closed above the 7,000 mark for the first time. The index finished at 7,384.56, up 447.57 points, or 6.45 percent from the previous session. Korea Times photo by Shim Hyun-chul

The KOSPI closed above the 7,000 mark for the first time on Wednesday, just about two months after crossing 6,000 points, extending its rally and repeatedly setting new record highs despite ongoing Middle East tensions.

The KOSPI’s total market capitalization also surpassed 6,000 trillion won ($4.1 trillion) for the first time. The combined market capitalization of the KOSPI and Kosdaq had earlier exceeded the 6,000 trillion won mark on April 27.

So far this year, Korea’s benchmark stock index has surged more than 70 percent from Dec. 30, 2025, fueled by strong liquidity driven by expectations for the artificial intelligence (AI) industry and earnings growth at semiconductor companies.

This marks the fastest rally among G20 markets. Over the same period, Taiwan’s TAIEX index has risen about 40 percent, while Japan’s Nikkei 225 has gained around 18 percent.

Notably, the KOSPI had dropped to 2,293.70 at the close on April 9, 2025, amid turbulence linked to U.S. tariff policy uncertainty, but has since surged nearly threefold in just over a year.

The KOSPI opened at 7,093.01, up 2.25 percent from the previous session, quickly breaching the 7,000 level after the opening bell. It maintained its upward momentum and ultimately finished at 7,384.56, up 447.57 points, or 6.45 percent.

With the index soaring, a sidecar, which temporarily halts program buying, was triggered at 9:06 a.m., according to the Korea Exchange. The measure is implemented when KOSPI 200 futures rise 5 percent or more from the reference price and remain at that level for at least one minute, suspending program buy orders for five minutes.

The recent rally has been underpinned by sharp upward revisions in earnings forecasts for major domestic semiconductor firms, amid expectations that a supply crunch driven by global Big Tech’s aggressive investment in AI infrastructure will persist for several years.

On Wednesday, Samsung Electronics and SK hynix shares climbed 14.41 percent and 10.64 percent, respectively.

“Unlike in the past, when earnings growth was mainly driven by a cyclical rebound in memory prices, the current upcycle is being supported by expectations of structural demand growth tied to the expansion of the AI industry, particularly in servers and high-bandwidth memory,” said Lee Young-gon, leader of the research center at Toss Securities.

He added that policy support and a favorable liquidity environment have also been key pillars of the rally, noting that government efforts to bolster the stock market have improved investor sentiment.

As recently as last year, few market participants anticipated the index would reach current levels. Even after the Lee Jae Myung administration, launched on June 4, 2025, put forward its “KOSPI 5,000 era” pledge, many in the securities industry regarded it more as a political message than a realistic target.

That skepticism reflected weak market conditions through the first half of last year. Foreign investors remained net sellers for nine straight months from mid-2024 to April 2025 amid concerns that Korea would be among the hardest hit by the second Trump administration and rising U.S.-China tensions. The market was further pressured by the fallout from former President Yoon Suk Yeol’s December 2024 martial law declaration and subsequent impeachment.

The KOSPI, however, shifted into a bull market as optimism grew over aggressive fiscal spending by the new government to revive the sluggish economy, along with expectations for policies to advance the capital market, including revisions to the Commercial Act.

After dropping to 2,293.70 on a closing basis on April 9, 2025, the index rebounded to 4,042.83 by Oct. 27 that year, breaking above the 4,000 level for the first time.

The rally continued, with the KOSPI surpassing 5,000 on Jan. 27 this year and climbing past the 6,000 mark on Feb. 25, driven by strong gains in Samsung Electronics and SK hynix that drew in retail investors who had long stayed on the sidelines.

KOSPI may rise to as high as 8,600 by year's end

While some have raised concerns about overheating, more experts expect the upward trend to continue, citing sustained earnings momentum in the semiconductor sector. Local brokerages see the index’s upper range this year at between 7,200 and 8,600.

Lee of Toss Securities said the current rally should be viewed as a signal of structural re-rating, adding that while oil prices and geopolitical risks could trigger short-term volatility, they are unlikely to alter the broader upward trajectory as long as the semiconductor growth story remains intact.

“Korean equities have historically been undervalued relative to global peers, but ongoing governance reforms and value-up measures are beginning to reshape market fundamentals,” he said. “At the same time, leading semiconductor firms are positioned to benefit from AI-driven growth, supporting structural earnings expansion and a reassessment of valuations.”

Hwang Seung-taek, head of the research center at Hana Securities, said the KOSPI could rise as high as 8,470 under a scenario in which “the U.S. Federal Reserve delivers one or two rate cuts and a semiconductor price-to-earnings ratio of eight times is applied.”

Yang Il-woo, an analyst at Samsung Securities, shared a similar view, saying robust AI-driven demand is likely to keep the market in a supply-constrained environment.

“Even after capacity expansion, the likelihood of significant oversupply appears low, suggesting that 8,400 is not an overly aggressive target,” he said.

Overseas brokerages are also revising their KOSPI forecasts upward.

JPMorgan has recently raised its target for the index to as high as 8,500, while Goldman Sachs lifted its 12-month projection from 7,000 to 8,000. Nomura Securities likewise set an upper target of 8,000, saying Korea’s semiconductor upcycle is expected to outweigh the impact of higher oil prices and potential macroeconomic headwinds.

Meanwhile, the secondary Kosdaq opened at 1,220.90, up 7.16 points, or 0.59 percent, from the previous session, but turned lower to close at 1,210.17, down 3.57 points, or 0.29 percent.

In the Seoul foreign exchange market, the Korean won opened at 1,465.8 per dollar, down 3 won from the previous session, but turned stronger on foreign buying in the domestic stock market and ended onshore trading at 1,455.1 per dollar, up 7.7 won.