The AI chip boom has boosted the market value of South Korean companies and driven sharp gains in the KOSPI index this year.
South Korea’s stock market has overtaken Canada’s to become the seventh-largest in the world, fueled by insatiable demand for the chips powering artificial intelligence.
The total market capitalization of listed South Korean companies surged 71% this year to $4.59 trillion, while the market value of Canadian companies rose about 7% to $4.5 trillion, according to data compiled by Bloomberg.
Shares of Samsung Electronics, which recently surpassed the $1 trillion valuation mark, and SK Hynix more than doubled this year, as their dominance in the AI semiconductor sector made both their products and stocks highly sought after.
The crossover highlights how the composition of stock indices increasingly determines the fortunes of national equity markets.
With the two chip giants accounting for 45% of the benchmark index weighting, South Korea’s market capitalization benefited from the semiconductor demand wave, surpassing major European markets such as the United Kingdom and France.
The KOSPI index has gained more than 70% since the beginning of the year, while Canada’s resource- and finance-heavy S&P/TSX Composite Index rose only 7%.
Ha Suk-kyun, Chief Investment Officer at Eugene Asset Management, said: “South Korea’s market capitalization is likely to expand further, driven by the AI-led memory cycle, while Canada appears more constrained due to its heavy concentration in energy and financial sectors.”
