South Korea's Composite Stock Price Index, hitting a new all-time high... Semiconductor and AI investment expectations dominate

South Korea’s Composite Stock Price Index (KOSPI) closed at 6,388.47 points on the 21st, setting a new all-time high. Market analysts believe that the core drivers of this round of gains are the improved earnings outlook for the semiconductor industry and expanded expectations for artificial intelligence investments. On that day, the KOSPI rose 169.38 points (2.72%) compared to the previous trading day, breaking the record set on February 26 of this year, when it closed at 6,307.27 points, after nearly two months. The Korea KOSDAQ Index also increased by 4.18 points (0.36%), closing at 1,179.03 points.

Securities firms believe that the recent strength of the index is not merely a short-term rebound but a trend based on corporate profit expectations. In particular, the semiconductor sector, represented by Samsung Electronics and SK Hynix, is seen as the core driver of the market rally. Although the US-Iran military conflict once severely shook investor sentiment, the market is beginning to lean toward the view that the worst phase of the conflict has passed and negotiations may be on the horizon. Therefore, some interpret that, compared to geopolitical uncertainties, the attractiveness of corporate performance and valuation (stock prices relative to corporate earnings) has regained the upper hand.

The background to this is the widespread belief that the development stage of the artificial intelligence industry is still in its early phases. Market experts believe that the technological development process—from generative AI to intelligent agents, and to embodied AI—is still progressing, and the high-performance semiconductor demand supporting these technologies is likely to continue growing. In fact, in Korea’s export indicators, semiconductors are leading the recovery momentum, and the improved earnings outlook for SK Hynix is thought to have stimulated foreign capital inflows. Compared to major countries, Korea’s stock market price-to-earnings ratio (P/E) remains around 8 times, still relatively low, which also supports the upward trend.

The revision of the “Capital Market Act Enforcement Decree” passed at the government meeting that day also bolsters investor confidence. According to the revision, starting next month, single-stock leveraged exchange-traded funds (ETFs) that track the daily returns of individual stocks like Samsung Electronics and SK Hynix with up to twice the upside or downside can be traded. These ETFs aim to track specific indices or asset prices, with leverage structures amplifying their gains or losses. The market believes that such products could further attract individual funds into large-cap stocks. However, there are concerns that, because the top market-cap semiconductor stocks in Korea are heavily weighted, excessive concentration of funds might not only push the index higher but also increase market volatility.

While experts believe that semiconductors are likely to continue leading the rally in the short term, they also expect rotation into other sectors with solid earnings support. The mention of secondary batteries, energy storage systems (ESS), nuclear power, shipbuilding, machinery, military industry, and power infrastructure reflects this view. Ultimately, the market is more sensitive to the subsequent negotiation pathways, the speed of corporate earnings improvement, and the expansion of AI investments—rather than the war news itself. This trend may indicate that, in the future, semiconductors will continue to play a key role in driving the index higher, while the upward momentum gradually broadens to industries with confirmed policy support and improving earnings.