Seoul: South Korea's benchmark stock index reached a new historic high of above 6,000 on Wednesday, just a month after it reached the once-unreachable level of 5,000 points, on a sustained chip rally in the face of uncertainty over U.S. tariff policy and heavy reliance on some shares.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) closed at 6,083.86 points, up nearly 2 percent from the previous session, after rising as high as 6,144.71. The KOSPI has advanced more than 40 percent so far this year, outperforming its peers as the winner in the global market. Last year, the index jumped over 70 percent. Its total market capitalization also broke the 5,000 trillion-won (US$3.6 billion) mark for the first time.
Kim Jae-seung, an analyst at Hyundai Motor Securities, explained that the continued rally was driven by major semiconductor makers, as demand for memory chips persisted amid a global race to invest in artificial intelligence (AI). Shares of Samsung Electronics and its rival SK hynix both rose over 50 percent since the start of the year.
The government's corporate reform efforts contributed to the boost, with a bill requiring companies to cancel treasury shares expected to be put to a vote this week. However, a surge by retail investors increased market volatility, prompting the country's main bourse operator to issue a sidecar, or a temporary halt in trading, four times over the past two months in the KOSPI and the secondary KOSDAQ market.
Heo Jae-hwan, an analyst from Eugene Investment and Securities, suggested that the KOSPI could trade in a range of 3,900 to 4,000 points when excluding the impact of the two chip giants, Samsung and SK hynix. A market correction could occur if their growth momentum slows.
Market observers also cited uncertainties surrounding the Federal Reserve's policy direction, the mid-term elections in the United States, and overheated competition in the global AI sector as factors affecting the local market. Despite these concerns, analysts remain broadly optimistic about the local market.
Over the past month, at least 10 local brokerages have revised up their target for the country's benchmark stock gauge. Hyundai Motor Securities expects the KOSPI to reach as high as 7,500 points, while NH Investment and Securities and Korea Investment and Securities have each raised their bull case target for the index to 7,300 and 7,250 points, respectively. Nomura recently increased the KOSPI target to 8,000, noting the index could surpass this level if South Korea accelerates its corporate reforms and structural improvements to the secondary KOSDAQ.