South Korea passes Britain to become world’s 8th largest stock market

SEOUL – South Korea has leapfrogged Britain to become the world’s eighth-biggest stock market, fuelled by a high-octane rally in its artificial intelligence-linked technology champions.

The total market capitalisation of South Korean-listed companies has surged more than 45 per cent in 2026 to US$4.04 trillion (S$5.15 trillion), while Britain’s has climbed about 3 per cent to US$3.99 trillion, according to data compiled by Bloomberg.

The size of the British market was about double that of South Korea’s as recently as the end of 2024.

The surge in South Korean stocks underscores the global pivot towards firms linked to AI, which has driven gains in the country’s two biggest listed companies – Samsung Electronics and SK Hynix.

The two memory-chip behemoths now account for over 40 per cent of the total market cap of the benchmark Kospi index, which has more than 800 constituents.

A further tailwind has been provided by President Lee Jae Myung’s push to bolster equity prices via corporate governance reforms and pro-market policies. 

“The rapid ascent of Korea and Taiwan reflects a structural rebalancing in global equity markets, driven by their dominance in AI hardware rather than tactical asset allocation,” said emerging markets and Asia-Pacific investment specialist Francesco Chan at JPMorgan Asset Management in Hong Kong.

“As the backbone of the AI supply chain – with a ‘super-cycle’ advantage in high-end foundries and memory – these economies are attracting sustained structural capital inflows.”

The rally in South Korean stocks mirrors that of Taiwan’s, which in April also overtook Britain to become the world’s seventh-largest share market.

Taiwan’s gains have been powered by the world’s largest chip foundry, Taiwan Semiconductor Manufacturing Company, which now accounts for about 45 per cent of the island’s benchmark gauge.

Taiwan’s stock market value, now at US$4.48 trillion, is approaching that of Canada.

Britain’s FTSE 100 Index has gained about 4 per cent in 2026, not much less than the MSCI All Country World Index, but well behind the supercharged gains of markets that have benefited from the AI boom.

The nation’s equity market, which is Europe’s biggest, remains dominated by traditional sectors such as financials, consumer staples, and energy and mining firms.

Forces such as the potential of AI, global defence spending and corporate governance reforms “support a much steeper trajectory for Korean and Taiwanese equities than for Europe”, said Mr Patrick Kellenberger, an emerging market equity strategist at Lombard Odier in Geneva. “Europe continues to struggle with commercialising and scaling innovation. Creating the conditions for innovative firms to emerge and grow is critical – but also time-consuming.” 

While equity values have soared for the Asian chip powerhouses, economies in the region remain much smaller than major European ones.

South Korea’s gross domestic product is estimated to be US$1.9 trillion in 2026 and Taiwan’s at US$977 billion, well below the forecasts for more than US$3 trillion for Germany, Britain and France, based on estimates from the International Monetary Fund.

For now, Wall Street strategists remain bullish over South Korean stocks, citing earnings upgrades from AI demand and favourable valuations.

Goldman Sachs Group has raised its Kospi target to 8,000, mainly driven by an increase of more than 200 per cent in its 2026 earnings growth projection. BLOOMBERG