Historic milestone: South Korea’s stock market surpasses Germany
Yesterday, South Korea's stock market reached a total market capitalization of $3.25 trillion, surpassing Germany's $3.22 trillion to become the world's 10th largest stock market!
From a year-to-date perspective, the KOSPI has surged more than 20%, making it the best-performing major equity index globally. In contrast, Germany’s DAX is up just 1.6% over the same period.
South Korea's large-cap indices posted even stronger gains, with the KOSPI 100 index rising over 25% year-to-date and the KOSPI 50 index climbing more than 26%.
Against this backdrop, Korean ETFs have shone brightly: $Direxion Daily MSCI South Korea Bull 3x Shares(KORU)$ has delivered over 94% returns this year, $南方两倍做多海力士(07709)$ has surged 61%, $PLUS Korea Defense Industry Index ETF(KDEF)$ has gained nearly 30%, and $韩国ETF-iShares MSCI(EWY)$ has climbed over 26%.
South Korea's stock market has overtaken Germany's, largely by riding the wave of AI!
In the Korean equity market, Samsung Electronics and SK Hynix together command a combined market capitalization of over $1 trillion, accounting for roughly 33% of the total market value of South Korea’s stock market.
Samsung and SK Hynix are giants in the memory chip industry. Their HBM3E (High Bandwidth Memory) products, which serve as core components for AI chips, are in high demand and have driven a surge in company performance.
For instance, Samsung Electronics' operating profit in the fourth quarter of last year reached 20 trillion won, a staggering 208% year-on-year increase, far exceeding analysts' expectations of 17.8 trillion won.
In contrast, among Germany's top 10 companies, only SAP is a software firm. While Infineon is a semiconductor giant, it has benefited only marginally from the AI wave. The remaining companies all operate in traditional industries:
This market structure inevitably means Germany will be overtaken by South Korea!
Currently, the AI wave continues to propel South Korea's stock market upward! On January 26, South Korean media reported that Samsung Electronics raised its NAND flash memory supply prices by over 100% in the first quarter of this year. Simultaneously, Samsung has initiated new negotiations with clients regarding second-quarter NAND pricing, with the market widely anticipating that the upward price momentum will persist into the second quarter.
Previously, prices for all Samsung memory semiconductor products were reported to have risen by up to 80%. This latest increase covers high-bandwidth memory (HBM), general-purpose DRAM such as DDR5 and DDR4, and certain NAND products.
It is understood that Samsung Electronics finalized supply contracts with major clients late last year and implemented the price hikes starting this January. Other manufacturers are following Samsung's lead, adopting new supply pricing for contracts signed in 2026. With constrained memory production capacity, memory chip prices are expected to remain elevated for an extended period.
On January 27, U.S.-listed hard disk giant Seagate Technology delivered strong results for its second fiscal quarter of 2026: revenue, gross margin, and earnings per share all exceeded market expectations.
CEO Dave Mosley stated:
“Our nearline capacity is fully booked through the end of calendar year 2026.”
“We expect to begin taking orders for the first half of calendar year 2027 in the coming months.”
“Multiple cloud customers are discussing their demand growth forecasts for calendar year 2028.”
This indicates that the South Korean stock market is poised to continue benefiting from AI, widening its lead over Germany! Investors may consider tracking relevant South Korean ETFs:
$韩国ETF-iShares MSCI(EWY)$ : With assets under management exceeding $10 billion, strong liquidity, and low management fees, it has attracted over $1.5 billion in net inflows this year. Samsung, SK Hynix, and Hyundai Motor collectively account for over 48% of its net asset value:
$Franklin FTSE South Korea ETF(FLKR)$ : $300 million in assets, slightly lower liquidity, but the lowest management fee at just 0.09%, significantly below EWY's 0.59%. Holdings are more diversified than EWY's:
$PLUS Korea Defense Industry Index ETF(KDEF)$ : Smaller in scale but focused on the defense industry. Amidst the current global turmoil and frenzied military spending expansion, KDEF has surged 30% year-to-date, significantly outperforming ewy. Additionally, its holdings have limited exposure to semiconductors, meaning it faces less downside risk should the AI bubble burst:
$Direxion Daily MSCI South Korea Bull 3x Shares(KORU)$ offers a triple leveraged long position on the Korea ETF, a leveraged product with high volatility unsuitable for long-term holding.
Hong Kong stock market options include:
$南方两倍做多海力士(07709)$ : A double leveraged long product on the individual stock, closely tracking SK Hynix's performance with amplified volatility;
$XL二南三星-U(09747)$ : Offers double exposure to Samsung Electronics with high volatility, suitable for short-term trading;
$TR韩国(02848)$ : Market cap around HK$700 million, slightly smaller scale but non-leveraged. Its holdings are similar to EWY, making it suitable for general investors.
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