South Korean Shares Surge to 3.5-Year High on Chip Sector Rally

South Korean Shares Surge to 3½‑Year High on Chipmaker Boost 🚀

South Korean shares hit their highest point in over 3½ years on Tuesday, powered by strong gains in semiconductor stocks following global industry rallies. The benchmark KOSPI index climbed 0.85%, reaching 2,971.56, briefly peaking at its best level since early January 2022.

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South Korean Shares Rise as KOSPI Breaks Key Level

The rebound of South korean came as chipmakers tracked gains from U.S. peers—particularly the Philadelphia Semiconductor index, which advanced about 3.03% on Monday, driven by a notable surge in AMD stock. In Seoul, Samsung Electronics rose 2.8% and SK Hynix gained 2.42%, while LG Energy Solution also recorded modest growth.

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South Korean Shares Reflect AI Policy Optimism

A parallel rally in South Korean also stemmed from optimism surrounding the new government’s AI agenda. Shortly after taking office on June 4, President Lee Jae‑myung appointed Ha Jung‑woo—head of Naver’s Future AI Centre—as the country’s first AI secretary. AI-focused companies soared: SK Hynix hit a record closing high (+5.31%), Samsung SDS climbed 21.7%, and LG CNS jumped 11.3%.

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South Korean Shares Benefit from Domestic Reforms

The boost in South Korean isn’t just due to chip demand. The new administration also pledged sweeping market reforms—revamping tax policy to support higher dividends, strengthening shareholder protections, and enhancing corporate governance. These moves aim to erase the so-called “Korea discount” and draw long-term investment.

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Tech, Auto & Defence Lift South Korean Shares

Beyond semiconductors, Korean shares saw broader gains across sectors. Hyundai and Kia climbed around 1%, while defense stocks rallied on geopolitical tension. Manufacturers like Hanwha Systems (+18%), LIG Nex1 (+5.3%), and Hanwha Aerospace (+2.7%) rose on hopes of increased exports.

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Foreign Flows Shift in South Korean Shares

Another sign of strength: foreign investors, previously selling, returned to bond markets, purchasing a record 11.3 trillion won in government bonds in May koreajoongangdaily.joins.com. In equities, however, they remained cautious—net selling 322.4 billion won on Monday. Meanwhile, retail and domestic institutional investors led buying activity, lifting the KOSPI above the 2,940 mark.

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Currency & Bond Scenes Amid South Korean Shares Rally

As Korean shares climbed, the won weakened slightly to around 1,361 per USD, reflecting mixed investor sentiment. On the debt side, the three‑year Treasury yield rose modestly 3.2 basis points to ~2.488%, while the ten‑year yield gained about 5.6 basis points to 2.876%.

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Geopolitical Tensions Won’t Derail South Korean Shares

Despite Middle East unrest, analysts say risk from foreign conflicts shouldn’t heavily weigh on South Korean shares. Park Kwang‑nam from Mirae Asset noted that while tensions persist, their impact on financial markets is expected to be limited. The finance ministry also agreed to step in swiftly if volatility surges.

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Can South Korean Shares Keep Climbing Toward 5,000?

With the index now nearing 3,000, attention turns to whether South Korean shares can sustain momentum. President Lee’s bold target—raising KOSPI to 5,000—relies on continued AI growth, corporate reform, and strong foreign interest. If policies stay on track and tech winnings persist, the course may be set.

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Final Word

The rapid ascent of South Korean shares to a 3½‑year high reflects a convergence of forces: booming chip demand, AI policy commitments, shareholder reforms, and sector-wide investor enthusiasm. With domestic and global sentiment aligning, the stage is set for further gains—though key markers like foreign inflows, geopolitical stability, and execution of reforms will determine if the upward trend continues.

Conclusion

The surge in South Korean shares reflects a perfect storm of positive factors: strong chipmaker performance, investor enthusiasm for AI, gains in defense-related stocks, and supportive government policies. Despite foreign selling and geopolitical uncertainties, domestic investor confidence and proactive fiscal measures continue to drive the momentum. As long as these trends hold, South Korean are well-positioned for sustained growth.

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