Kospi surges past 6,300; President Lee flags ‘Korea premium’
Individual investors continue to pile in, while record margin loans and an elevated volatility index signal the potential of sharp near-term swings
South Korea’s stock market climbed to a fresh record high again on Thursday as stronger-than-expected earnings of AI chip giant Nvidia eased concerns about a potential artificial intelligence bubble, lifting chipmaker and robotics stocks.
The index opened above 6,100 and touched an intraday high of 6313.27, its historic high.
Thursday marked its sixth consecutive day of gains, a move President Lee Jae Myung described as a sign of the normalization of the domestic capital market.
“The capital market is moving along the path of normalization,” Lee said at a senior aides’ meeting held at the presidential Blue House.
“South Korea must move beyond the so-called ‘Korea discount,’ and advance toward a ‘Korea premium,’ where its market commands higher valuations than its peers,” he added.
The "Korea discount" refers to the persistent undervaluation of Korean stocks.
Shares of Samsung Electronics Co. and SK Hynix Inc., key suppliers of Nvidia, each jumped more than 7%. Samsung extended gains for a ninth consecutive session.
Nvidia, the market’s bellwether for AI demand, posted record quarterly data center revenue of $62.3 billion in the fourth quarter, up 22% from the prior three months and up 75% from a year ago. The results exceeded market expectations.
Noh Dong-gil, an analyst at Shinhan Securities, said the Kospi could take a breather after its rapid ascent, but it would not signal a reversal of the broader trend.
Even after the rally, valuations remain below those of regional peers. The Kospi is trading at 10.4 times forward 12-month earnings, broadly in line with its 10-year average of 10.3 times.
Japan’s Nikkei 225 trades at about 24.0 times forward earnings, Taiwan’s TAIEX at 24.8 times, and Hong Kong’s Hang Seng Index at 13.0 times.
Analysts say sharply rising operating profit estimates for Samsung Electronics and SK Hynix would guarantee the valuations of the country's two largest stocks.
Individual investors bought a net 1.14 trillion won worth of shares on Thursday, while institutional investors added a net 1.02 trillion won. Foreign investors remained in the opposite direction, offloading a net 2.39 trillion won in stocks.
Cho Soo-hong, head of research at NH Investment & Securities, projected that tight chip supply could persist through 2028 as AI applications expand from text-based services into video, driving heavier data-processing demand.
Robot-related stocks also rallied on Thursday amid expectations for broader adoption of physical AI after Nvidia, in its fourth-quarter earnings report, cited Boston Dynamics and LG Electronics Inc. among the users of its latest AI platform designed for real-world applications.
Shares of Hyundai Motor Co., the parent of Boston Dynamics, rose 6.47%, Hyundai Mobis Co. jumped 12.67%, and LG Innotek surged 20.0% on the day.
After surging 75.6% last year, the Kospi has climbed another 49% in just over two months this year, prompting some investors to warn of a possible short-term pullback.
A key gauge of market anxiety is flashing warning signs. The Kospi Volatility index climbed 10.29% from the previous session to 54.67 on Thursday, extending its advance to an eighth straight session.
The index, which measures expected volatility over the next month based on Kospi 200 option prices, is generally interpreted as signaling extreme fear when it exceeds 50.
Still, the prevailing view is that any near-term pullback is unlikely to be severe or prolonged.
However, retail leverage is another overhang. Data from the Korea Financial Investment Association show that outstanding margin loans stood at a record 32.13 trillion won ($22.5 billion) as of Wednesday, up 18% from the start of the year.
Margin loans represent funds borrowed by individual investors from brokerages to purchase shares that have yet to be repaid.
In several small and mid-cap stocks, margin balances account for 7% to 9% of shares outstanding, including plastic products manufacturer Samyoung Co. and Hannong Chemicals Inc.
"Once a market correction begins, outstanding margin loan balances can turn into a 'selling bomb,'" a securities industry official said. "This has the potential to magnify the overall decline of the stock market."
The junior Kosdaq market has also extended its gains. Its index added 1.97% to close at 1,188.15 on Thursday, bringing its year-to-date gain to 28.38%.
In less than two months, the index has nearly matched its full-year advance of 36.46% in 2025, supported by a series of policy initiatives aimed at revitalizing the junior stock market.
However, some analysts caution that the rally has been heavily concentrated in biotech and secondary battery shares, leaving the market vulnerable if policy support wanes or earnings fail to keep pace with expectations.
Sam Chun Dang Pharm Co. has emerged as one of the standout performers on the Kosdaq, with its shares skyrocketing 225.59% so far this year.
On Thursday, the stock surged to its daily limit, soaring 30% to 757,000 won after the company announced an exclusive licensing and commercialization agreement for generic versions of diabetes and obesity treatments across 10 European countries, excluding the UK.
Meanwhile, the won strengthened to a one-month high against the dollar in onshore trading. The currency closed at 1,425.80 won per dollar, marking its strongest finish since Jan. 28.