When the U.S. market falters, the KOSPI often follows suit. A downturn in China's economy typically leads to sell-offs in South Korea.
This year, however, is different. Neither the Middle East conflict nor the U.S.-China power struggle has managed to shake the markets. This week, the key variable was expected to be the U.S.-China summit.
Yet, the KOSPI continues its march toward an all-time high.
Having already surged nearly 80% this year, it is achieving the best performance among major global indices. South Korea has surpassed the United Kingdom to become the eighth-largest stock market in the world, valued at $4.04 trillion. Six of the world's top ten stock markets are now in Asia. The market is beginning to prioritize AI over geopolitical concerns.
This is not merely a thematic rally; the industrial order itself is changing.
Even a single response from ChatGPT relies on GPUs, memory, power grids, and data centers to function. While AI may appear to be software, it actually operates on a vast hardware supply chain, with Asia at its core.
Taiwan dominates the foundry sector. Without TSMC, there is no AI. Over 90% of the world's most advanced chip production passes through this company. In the first quarter of 2026, TSMC's revenue increased by 35% year-on-year to $35.6 billion, with net profit soaring by 58%. This year, its capital expenditure guidance is set to reach up to $56 billion, a 40% increase from the previous year. TSMC's clients are expected to spend over $1.2 trillion on data center capital expenditures by 2028.
South Korea controls the memory bottleneck. In the AI era, High Bandwidth Memory (HBM) is not just a common component; it is a critical infrastructure that determines processing speed.
SK Hynix is projected to surpass Samsung for the first time in operating profit in 2025, reaching 47.2 trillion won, with its stock price rising by 210%. The company holds a market share of 57-62% in HBM, and its production for 2026 is already sold out. Bank of America has labeled this year as a "1990s-style memory supercycle."
This fervor is spreading beyond semiconductors to power equipment, transformers, shipbuilding, and batteries. This is why HD Hyundai Electric and LS ELECTRIC have backlogs filled for several years.
Japan supplies the equipment needed to manufacture chips. Tokyo Electron, Advantest, and Lasertec benefit every time TSMC and SK Hynix expand their operations. The Nikkei 225 index surpassed 60,000 for the first time in April 2026, soaring 5.58% on the first trading day after Golden Week, led by SoftBank, which rose 18%. JP Morgan's year-end target is set at 70,000.
China and Hong Kong are building their own ecosystems. With advanced chip imports from NVIDIA blocked, China surprised the world with its DeepSeek R1. The Hang Seng Index rose by 28% in 2025. Alibaba announced a $52 billion investment in AI infrastructure over three years. The price-to-earnings ratio for Hang Seng Tech is 24, lower than the Nasdaq 100's ratio of 25-31. While the U.S. has created a leading model, China is constructing a parallel ecosystem around it.
The structural logic is straightforward. Software originated in the U.S., but the supply chain that powers it is in Asia. Once, Asia was known as the "world's factory" based on cheap labor. Now, it is shifting to become the central axis of critical infrastructure supporting the global AI system.
What is happening in the market is not just a technological rally; it is a once-in-a-generation shift in industrial value. The KOSPI stands at the center of this flow. This is why the market remains resilient despite bubble concerns; investors are betting on a reorganization of the industrial order rather than a short-term trend.
Intelligence was born in California. However, the power, memory, semiconductors, and factories that make that intelligence operational now pulse from Asia.
* This article has been translated by AI.
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