South Korea Overtakes UK as the World’s Eighth Largest Stock Market

The AI chip boom is reshaping the global stock market landscape. South Korea's stock market has seen its market value soar by more than 45% this year, reaching $4.04 trillion, surpassing the UK stock market's $3.99 trillion with a gain of about 3%, to become the world's eighth-largest stock market. It is worth noting that at the end of 2024, the UK stock market capitalization was nearly twice that of South Korea's.

The core driver of this reversal is Samsung Electronics and SK Hynix. The two memory chip giants together account for more than 40% of the total market value of South Korea's benchmark composite index KOSPI, which has over 800 constituents. The explosive demand for AI computing infrastructure has made both companies direct beneficiaries of this rally. At the same time, South Korean President Lee Jae-myung's promotion of corporate governance reform and market-friendly policies have also provided additional support for the stock market rise.

South Korea is not an isolated case. Taiwan's stock market also surpassed the UK in April to become the world's seventh-largest stock market, with a market value of $4.48 trillion, gradually approaching Canada. TSMC alone accounts for about 45% of Taiwan's benchmark index weight, being the absolute protagonist of Taiwan's stock market rally.

Morgan Chase Asset Management's Hong Kong-based emerging markets and Asia-Pacific investment expert Chen Feng said in an interview with Bloomberg that the rapid rise of South Korea and Taiwan reflects a structural rebalancing of the global stock market, which is based on the two regions' dominant position in the field of AI hardware, rather than short-term asset allocation adjustments. He believes that as the core pillars of the AI supply chain, the two regions are attracting ongoing structural capital inflows.

In comparison, the UK's FTSE 100 index has risen by about 4% this year, which is roughly in line with the MSCI Global Index but far behind the gains of the Asian chip market. The UK market is still dominated by traditional sectors such as finance, consumer staples, and energy mining, with limited participation in the AI wave. Patrick Kellenberger, emerging market equity strategist at Longo Security Bank, said that Europe continues to lag behind in commercializing and scaling innovation, and it takes time to create a nurturing environment for innovative companies to grow.

However, the market cap's counter-overtaking does not mean that the economies are on par. South Korea's GDP is expected to be about $1.9 trillion this year, and Taiwan's is about $977 billion, both far below the economic scale of the UK, Germany, and France, each exceeding $3 trillion. The above data comes from the International Monetary Fund's forecast.

For investors, Wall Street institutions are still generally bullish on South Korea. Goldman Sachs has raised its KOSPI target to 8,000 points, mainly based on its more than 200% increase in its 2026 earnings growth forecast. The next key points to watch are whether the performance of Samsung and SK Hynix can continue to cash in on the profits brought by AI demand, and whether South Korean corporate governance reform can further open up valuation space.