Semiconductor, Retail Investors Push Kospi Past 9,000 Mark; 10,000 in Sight

The benchmark Korea Composite Stock Price Index (Kospi) reached a new milestone today (June 18), surpassing the 9,000 mark for the first time in history.

Climbing to the 9,000-point mark just about a month after breaking through the 8,000 threshold, the index has written a new chapter in the history of South Korea's capital market.

According to the Korea Exchange and Yonhap Infomax, the Kospi stood at 9,000.68 as of 12:52 p.m. today, ushering in the era of the 9,000-point Kospi.

The index opened at 8,884.92, up 20.68 points (0.23%) from the previous trading day, and expanded its gains before finally crossing the 9,000 threshold.

This milestone comes 34 days, or 22 trading days, after the index breached the 8,000 mark for the first time on May 15.

After crossing the 4,000 mark on October 27 last year, the Kospi went on to surpass 5,000 on January 22 this year, 6,000 on February 25, and 7,000 and 8,000 on May 6 and 15, respectively, before finally topping the 9,000 mark today.

Looking at the time taken to cross each 1,000-point milestone, it took 87 days to go from 4,000 to 5,000, 34 days to reach 6,000, 70 days to hit 7,000, and just 9 days to reach 8,000.

Since the beginning of the year, the Kospi has surged 110.34% as of the previous trading day, recording the highest growth rate among major global stock indices.

Compared to the same period, where the U.S. Nasdaq rose 11.96%, the S&P 500 gained 8.39%, and the Dow Jones Industrial Average increased 7.13%, the Kospi's growth rate is overwhelmingly dominant.

Consequently, the total market capitalization of the main Kospi market has surpassed 7,300 trillion won.

The primary driver behind the Kospi's soaring rally is undoubtedly semiconductor stocks.

This is due to a surge of stock market capital into AI-related shares amid high expectations for the artificial intelligence (AI) industrial revolution, which has sent the stock prices of the "two semiconductor giants," Samsung Electronics and SK Hynix, skyrocketing.

For SK Hynix, expectations of short-term supply-demand momentum ahead of its American Depositary Receipt (ADR) listing in August have also added fuel to the rally.

As a result, Samsung Electronics, the top company by market cap, has risen 188.99% this year, while second-ranked SK Hynix has surged 287.25%, leading the index's upward march.

Furthermore, the launch of single-stock leveraged exchange-traded funds (ETFs) on May 27 further concentrated capital into these stocks, boosting the index.

The combined weight of these two stocks in the main Kospi market exceeds 50%, with Samsung Electronics accounting for 28.17% and SK Hynix for 25.84%.

An improving macroeconomic environment also pushed the index higher.

The risk of war between the United States and Iran, which had heavily weighed on domestic and global stock markets for over 100 days, was significantly reduced after the two nations signed a memorandum of understanding (MOU) to end hostilities.

With expectations that the "oil route," which had been blocked by the conflict, will reopen and international oil prices—which had fueled inflation—dropping to the $70-per-barrel range, concerns over rising consumer prices have eased.

Although there were predictions that the stock market's momentum might slightly falter after the U.S. Federal Open Market Committee (FOMC) took a hawkish stance last night, it failed to stop the unstoppable rally of the Kospi.

In terms of supply and demand, retail investors deserve the credit.

This year alone, retail investors have supplied liquidity by net purchasing 73.353 trillion won worth of shares in the main Kospi market as of the previous trading day.

While foreign investors went on a selling spree of 121.134 trillion won, retail investors, along with institutional investors who net purchased 34.233 trillion won, supported the stock market.

In particular, from May 15, when the Kospi broke the 8,000 mark, until yesterday, retail investors net purchased 33.79 trillion won in the main market.

This influx of retail capital was driven by the semiconductor super-cycle, policy efforts by political circles to modernize the capital market—such as revising the Commercial Act— and the fear of missing out (FOMO).

A massive "money move," where retail funds shifted heavily into the capital market, served as the ammunition for the rally.

Even though the banking sector raised the threshold for credit loans, the influx of retail investors into the stock market continued.

During this period, retail investors net purchased Samsung Electronics the most in the main market in terms of both volume and value.

Consequently, while some in the securities industry worry about market overheating, many believe that the Kospi could break the 10,000 mark.

Eugene Investment & Securities projected the Kospi could rise up to 10,400, Hana Securities forecast 10,380, and KB Securities estimated 10,500.

DB Financial Investment suggested a target of 11,700, while Daishin Securities presented a target of 11,500.

Among global investment banks (IBs), JPMorgan and Morgan Stanley estimated that the index could reach 10,000 under a bull market scenario.

Lee Kyung-min, a researcher at Daishin Securities, explained, "Currently, nearly 70% of all transactions for AI server DRAM are being conducted in the form of long-term contracts, and non-semiconductor sectors have reflected the implementation of the Commercial Act revision, announcements of large-scale treasury stock cancellations, and the strengthening of shareholder-friendly policies."

He added, "While we must consider a phase of cooling down short-term overheating and digesting profit-taking, the Kospi's record-breaking run will likely continue due to the normalization of valuations based on earnings."

However, concerns about overheating also coexist.

The VKOSPI, the Kospi 200 volatility index often referred to as the "Korean fear index," remained at a relatively high level of 77.90 as of 12:52 p.m. today.

There are also concerns that the concentration of capital into large-cap semiconductor stocks like Samsung Electronics and SK Hynix is intensifying every time the index hits a new record.

Although profit-taking sales have emerged in semiconductor stocks following the signing of the peace MOU, and sector rotation has slightly shifted toward reconstruction stocks like construction and defense, the concentration remains high.

On the previous trading day, only 349 stocks rose in the main market, compared to 526 declining stocks.

Han Ji-young, a researcher at Kiwoom Securities, noted, "In May, only four sectors—IT hardware, semiconductors, automobiles, and insurance—outperformed the Kospi. However, since the start of June, that number has grown to 11, including retail/distribution, insurance, banking, and semiconductors." He added, "The ongoing sector rotation and dispersion of performance are factors that could help calm the FOMO phenomenon triggered by the concentration in a few sectors."

He said, "Of course, even if sector rotation or catch-up rallies occur, it is still appropriate to maintain an overweight strategy on existing AI value chain leaders, such as semiconductors and MLCCs, from the perspective of earnings and narrative."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.