South Korean Stocks Near Records as Chip Rally Powers the Kospi

South Korean equities have been among the strongest performers in Asia in 2026, with the benchmark Kospi index trading near record highs as a global boom in semiconductors and artificial intelligence supercharges demand for the country's memory chips and advanced components. Korean and Japanese shares have repeatedly led regional gains this year, drawing both domestic retail investors and foreign inflows into a market that had long traded at a discount to global peers. The rally has been underpinned by extraordinary export strength, with the country's semiconductor shipments surging as data-centre and AI investment accelerates worldwide. At the same time, the advance has not been one-directional: bouts of profit-taking have periodically pulled shares back, and the won has slipped against the dollar even as equities climbed, reflecting the pull of higher US yields and a firm greenback. Policymakers at the Bank of Korea have flagged financial stability risks, including rising household debt and leveraged stock investments, as more first-time investors pile into the market. For now, the combination of resilient earnings, an AI-driven export cycle and easing valuations has kept sentiment broadly positive, though investors remain alert to any cooling in the semiconductor upturn.