Here's the real reason South Korea has the hottest stock market in the world

By Steve Goldstein

The market value of Samsung Electronics topped $1 trillion for the first time on May 6, 2026, riding an AI chip boom that has sent South Korean stocks to record highs. (Photo by Jung Yeon-je / AFP via Getty Images)

South Korean stocks shot up another 6% on Wednesday and Samsung Electronics reached $1 trillion in market cap, two milestones on a remarkable year that seen the Kospi index surge 75% this year and nearly triple over the last 52 weeks.

The gains have some commentators drawing parallels to the dot-com bubble.

But there is a huge difference. Using analyst estimates for 2026 culled from FactSet, one can see how much of the gains for the Kospi KR:180721 are speculation - the multiple assigned to earnings - and how much is due to fundamentals.

And while last year investors (correctly) speculated on the market, the 2026 gains are entirely driven by fundamentals. In fact, the price-to-earnings multiple has actually gone down this year.

The reason why earnings estimates are shooting up so much is mostly due to two companies, Samsung (KR:005930) and SK Hynix (KR:000660), with Hynix minority owner SK Square (KR:402340) also providing a boost.

Memory chips are in such demand to fuel artificial-intelligence-powered data centers that they're also lifting the prices on chips used for more conventional purposes.

Last week, Samsung reported that revenue from its semiconductor division tripled in just the last quarter alone.

Of course those gains are not limited to South Korea. Taiwan's Taiex TW:Y9999, driven by Taiwan Semiconductor Manufacturing Co. (TSM), has climbed 42% this year and the PHLX Semiconductor Index SOX has jumped 55%.

-Steve Goldstein

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05-06-26 1051ET