A financial data screen in the dealing room of Hana Bank in central Seoul on Monday shows the benchmark Kospi closing at 6,615.03. The country's combined stock market capitalization surpassed 6,000 trillion won for the first time on the same day. (Yonhap)
A financial data screen in the dealing room of Hana Bank in central Seoul on Monday shows the benchmark Kospi closing at 6,615.03. The country's combined stock market capitalization surpassed 6,000 trillion won for the first time on the same day. (Yonhap)

South Korea’s stock market has climbed to eighth place globally by market capitalization, overtaking the UK, on the back of a strong rally fueled by semiconductor gains and policy support.

According to the Korea Exchange on Tuesday, the combined market capitalization of the Kospi and Kosdaq reached 6,101 trillion won ($4.1 trillion) as of Monday’s close.

The Kospi accounted for 5,421 trillion won, while the Kosdaq stood at 679 trillion won.

Global comparisons show Korea has surpassed the UK — with a market cap of about $3.99 trillion — to rank eighth worldwide, behind the US, China, Japan, Hong Kong, India, Canada and Taiwan.

The rise reflects a sharp rally in local equities this year. The Kospi has surged 56.97 percent year-to-date, while the Kosdaq has gained 32.49 percent. Combined market capitalization has expanded by more than 50 percent over the same period.

The gains have been driven by strong earnings expectations in semiconductors amid the artificial intelligence boom, alongside government efforts to boost the equity market.

Analysts say the rally could extend further, noting that Korean equities remain undervalued relative to global peers because profits have increased even faster than share prices.

“Explosive growth in semiconductor earnings has pushed valuations to historically low levels,” said Lee Young-won, an analyst at Heungkuk Securities. “As confidence in earnings sustainability builds, a recovery in price-to-earnings ratios is likely, with the Kospi potentially rising into the mid-7,000 range this year.”

A price-to-earnings ratio is a common measure of share price valuation. A lower ratio means shares are relatively cheap in relation to a company's profits.

Kim Jun-young of iM Securities said earnings estimates continue to rise sharply, led by semiconductors.

“Operating profit for Kospi-listed firms is now projected at around 800 trillion won this year,” he said, adding that earnings could grow a further 20.6 percent to 959 trillion won next year.

The outlook suggests Korea’s equity market may be entering a re-rating phase, supported by stronger fundamentals and sustained investor interest.


jylee@heraldcorp.com