South Korea's benchmark stock index has crossed the 7,000-point mark for the first time ever, led by chip giant Samsung Electronics (SSNLF). Investor sentiment was lifted by the global AI-driven chip rally a day ago and strong economic data released on Monday.

Record high: The KOSPI index closed 6.5% higher at 7,384.56 on Wednesday, paring some gains after reaching a record intraday high of 7,426.60. The index's top gainers were Samsung, whose Seoul-listed shares rose over 14%, and Nvidia supplier SK hynix, which gained about 11%. Samsung's market cap also surpassed $1T, making it the second Asian company to join the trillion-dollar club after Taiwan Semiconductor (TSM). KOSPI's latest rally added to Monday's gains, which were fueled by strong manufacturing activity and exports due to AI-driven chip demand. The stock market was closed on Tuesday. The index gained 71% YTD, and is up about 187% over the past year. To note, KOSPI rose 76% in 2025, which was its best annual performance since 1999.

Bigger picture: "If the demand for AI chips continues ​at this level, KOSPI could reach 10,000 points by the end of this year," Seo Sang-young, analyst at Mirae Asset Securities, told Reuters. "But if the demand ​collapses with worries over ⁠inflation and weak growth due to the Iran war, it could plummet to as low as 4,500." Inflation in South Korea accelerated in April, but government measures like food vouchers and a gasoline price cap helped absorb some of the Iran war-driven energy shock. But inflation is expected to heat up going forward. "Strong exports, driven by semiconductors, will support overall growth, but the domestic economy will likely be hit harder by energy price hikes," ING Economic and Financial Analysis projected.

SA commentary: According to SA analyst Ricardo Fernandez, the most compelling reason to invest in South Korea is that Samsung and SK Hynix "are witnessing spectacular demand due to AI data center construction." These companies together account for over 60% of the memory chip market. "The market believes this sector can nearly double by 2030, and given the scarcity, companies have pricing power that has driven margins to the 50% level," Fernandez noted. "This has translated into extraordinary EPS growth, while valuations remain very cheap at under 6x PE." In an earlier analysis, FinHeim Research pointed to another catalyst - the multi-year unwinding of the "Korea Discount," which refers to the persistent valuation gap between South Korean stocks and global peers.