South Korea becomes world’s sixth-largest stock market as AI rally lifts valuation to $5 trillion: Report – Firstpost

South Korea has emerged as the world’s sixth-largest stock market after a powerful rally in artificial intelligence-linked semiconductor stocks pushed the combined value of its listed companies to $5 trillion, according to data compiled by Bloomberg.

The country’s stock market has added nearly $2.3 trillion in value this year as investors pile into semiconductor companies powering the AI revolution, propelling South Korea ahead of several developed peers and cementing its position among the world’s largest equity markets.

The rally has been led by semiconductor giants Samsung Electronics and SK Hynix, both of which recently crossed the $1 trillion valuation mark amid soaring demand for advanced memory chips used in AI systems. Their gains have helped drive South Korea’s benchmark Kospi Index to record highs, underscoring the market’s growing dependence on the global AI investment cycle.

The milestone highlights how artificial intelligence is reshaping global capital flows, rewarding countries that occupy critical positions in semiconductor manufacturing and advanced technology supply chains.

AI boom reshapes global market rankings

South Korea’s ascent comes as investors worldwide channel billions of dollars into companies supplying the hardware needed to power generative AI models, hyperscale data centres and next-generation computing infrastructure.

Alongside Taiwan, South Korea has emerged as one of the biggest beneficiaries of the AI spending boom. Samsung Electronics and SK Hynix dominate the global market for high-bandwidth memory (HBM) chips, a crucial component used in AI accelerators produced by companies such as Nvidia.

Reform agenda adds momentum

The market rally has also been supported by reform measures championed by President Lee Jae Myung, aimed at improving corporate governance and boosting shareholder returns.

Efforts to narrow the long-standing “Korea discount” — the tendency for South Korean stocks to trade at lower valuations than many global peers — have helped improve investor sentiment and attract fresh capital into the market.

The combination of governance reforms and strong earnings prospects for technology companies has prompted some Wall Street strategists to project further gains for the Kospi despite its already stellar performance.

Economic headwinds remain

The stock market’s rise has come even as South Korea faces mounting economic pressures.

Data released on Tuesday showed consumer inflation accelerated to 3.1 per cent in May, the fastest pace in more than two years and above economists’ expectations. Rising energy costs linked to tensions in West Asia have fuelled concerns that inflation could remain elevated for longer.

Petroleum product prices climbed 24.2 per cent from a year earlier, while international airfares surged 33.5 per cent, according to official data.

The Bank of Korea has adopted a more hawkish tone and is widely expected to raise interest rates as early as July to curb inflation and support the won. Core inflation, which excludes volatile food and energy prices, accelerated to 2.5 per cent in May, marking its fastest pace since early 2024.

Despite these challenges, investors remain focused on South Korea’s pivotal role in the global AI supply chain, betting that sustained demand for advanced semiconductors will continue to drive earnings growth for the country’s technology champions.

The surge has transformed South Korea into one of the biggest winners of the AI boom, demonstrating how technological leadership can rapidly reshape financial markets even as broader economic headwinds persist.