South Korea has moved ahead of the United Kingdom to secure the position of the world’s eighth-largest equity market, driven by a strong surge in technology stocks tied to artificial intelligence. Fresh data compiled by Bloomberg shows that the total market capitalisation of Korean-listed firms has jumped over 45 per cent this year to reach $4.04 trillion. In comparison, the UK market has grown modestly by around 3 per cent to $3.99 trillion.
Not long ago, the gap between the two was significant. By the end of 2024, the UK’s stock market was nearly twice the size of South Korea’s.
AI boom powers Korean market rally
As per a report by NDTV, the sharp rise in South Korean equities reflects a broader global shift toward companies connected to artificial intelligence infrastructure. Major gains have been led by chip giants like Samsung Electronics and SK Hynix, both of which have benefited from rising demand for advanced memory chips.
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Together, these two firms now account for more than 40 per cent of the total market capitalisation of the Kospi index, which includes over 800 listed companies. Their performance has played a central role in lifting the overall market.
Policy measures have also contributed. President Lee Jae Myung has introduced reforms aimed at improving corporate governance and supporting equity valuations, further boosting investor confidence.
“The rapid ascent of Korea and Taiwan reflects a structural rebalancing in global equity markets, driven by their dominance in AI hardware rather than tactical asset allocation,” NDTV cited Francesco Chan as saying. “As the backbone of the AI supply chain, with a ‘super-cycle’ advantage in high-end foundries and memory, these economies are attracting sustained structural capital inflows.”
Taiwan follows a similar growth path
South Korea is not alone in this trend. Taiwan has also seen a significant rise, recently overtaking the UK to become the world’s seventh-largest stock market. Its growth has largely been powered by Taiwan Semiconductor Manufacturing Co., which makes up nearly 45 per cent of its benchmark index.
Taiwan’s total market value now stands at $4.48 trillion, bringing it closer to Canada’s market size.
UK market lags behind tech-driven gains
While the UK’s FTSE 100 Index has posted gains of about 4 per cent this year, its progress remains slower compared to AI-driven markets. The UK market continues to be dominated by sectors such as financial services, energy, mining, and consumer staples, which have not matched the pace of tech-led growth.
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“Europe continues to struggle with commercialising and scaling innovation. Creating the conditions for innovative firms to emerge and grow is critical, but also time consuming,” NDTV quoted Patrick Kellenberger as saying.
Strong outlook backed by AI demand
Despite their rising market values, Asian economies like South Korea and Taiwan remain smaller in terms of overall GDP compared to major European nations. However, investor sentiment remains positive.
The report further stated that the Wall Street analysts continue to expect further upside in Korean equities, supported by strong earnings forecasts linked to AI demand. Goldman Sachs Group Inc. has raised its Kospi target to 8,000, citing a projected surge of more than 200 percent in earnings growth by 2026.
