S Korea stocks crush global benchmarks with best stock rally since 1999
South Korea's stock market saw a remarkable surge in 2025. The Kospi Index recorded its best performance in 25 years. Strong gains were seen in arms exporters, AI, and K-beauty sectors. Chip giants like Samsung Electronics and SK Hynix contributed significantly. Analysts predict further growth for the market.
South Korea's stock market renaissance in 2025 was one for the history books. Buoyed by world-beating gains in arms exporters to eye-popping surge in AI and K-beauty shares, the market just capped its strongest advance in a quarter century.
The Kospi Index has soared 76% this year, compared with the S&P 500's 17% advance so far and MSCI Asia Pacific Index's 25% gain. The Korean benchmark's performance, the best among major equity gauges, has been helped by chip heavyweights Samsung Electronics and SK Hynix as well as defence and nuclear firms.
Analysts see further upside ahead, with Citigroup, JPMorgan Chase and Nomura Holdings are among brokers forecasting at least another 20% climb next year. Strong earnings growth should bolster that upward trajectory, analysts add.
The biggest artificial intelligence winners weren't conventional chipmakers or large-cap names but proxy plays. That includes power transformer maker Hyosung Heavy Industries and nuclear power provider Doosan Enerbility, which saw shares up more than 320% each this year, according to Korea Exchange.
Despite their high valuations, bulls argue that there’s no quick carbon-free alternative to meet surging power demand of AI data centers, making these players indispensable.
Investor interest in power grid and infrastructure stocks should continue into 2026, according to Morgan Stanley analysts. Among them, HD Hyundai Electric Co. is entering “a multi-decade re-rating as grid modernization, AI data center, and decarbonization converge,” they said.
Agencies
Memory Bulls
Samsung and SK Hynix had a standout year, cementing their status as Kospi heavyweights and the world’s top manufacturers of memory chips. Thanks to growing demand from global tech giants for specialized, high-performance chips, Samsung has jumped 125% this year to an all-time high. SK Hynix rose about 270%.
The momentum has spilled over into related firms like SK Hynix’s parent SK Square Co. and Korea Circuit Co., which counts Broadcom Inc. as its customer. Both stocks are up more than 330% each.
“Shortages in memory chips are unquestionably taking hold so I expect an extremely strong year for Korean semiconductor stocks,” said Kang DaeKwun, chief investment officer at Life Asset Management in Seoul.
Defense Stars
President Donald Trump’s reshaping of traditional security alliances spurred new defense spending across Europe and Asia this year, driving renewed interest in Korean contractors known for delivering weapons faster and at lower cost.