Relentless Semiconductor Rally Pushes Samsung Electronics and SK Hynix to 43% of Market Cap

The share of Samsung Electronics Co., Ltd. and SK Hynix in the KOSPI Composite Index's market capitalization is expanding rapidly, giving them even greater influence over the market. Analysts say the two stocks are likely to lead the index higher in the second quarter of this year as the memory market continues to improve on rising demand for Artificial Intelligence (AI).
According to Korea Exchange (KRX) on the 30th, the KOSPI Composite Index's market capitalization stood at 5,407.4678 trillion won. At the start of the year, it was 3,558.7365 trillion won, meaning it has increased by about 1,900 trillion won. Over the same period, the combined market capitalization of Samsung Electronics Co., Ltd., SK Hynix, and Samsung Electronics Co., Ltd. Preferred Shares rose from about 1,300 trillion won to the 2,300 trillion won range, an increase of roughly 1,000 trillion won. As a result, their combined share of the index's market capitalization expanded from 37% to 43.1%, with semiconductors accounting for much of the index's gains.
The stock price rally has also been sharp. In April alone, Samsung Electronics Co., Ltd. rose 31.88%, while SK Hynix gained 59.36%, far outpacing the KOSPI Composite Index.
The concentration in semiconductors has become even more pronounced among the largest stocks by market capitalization. At the start of the year, Samsung Electronics Co., Ltd. and SK Hynix ranked first and second, while Samsung Electronics Co., Ltd. Preferred Shares stood in fifth place, leaving only two semiconductor names among the top three stocks. By the end of April, however, Samsung Electronics Co., Ltd. Preferred Shares had climbed to third place, filling the top three with semiconductor stocks. SK Square, the largest shareholder with about a 20% stake in SK Hynix, also rose from eighth to fourth place, showing that the upper ranks of the market have come under strong semiconductor influence.
The semiconductor-led rally is also being supported by foreign buying.
In the first quarter of this year, foreign investors were net sellers of about 37.9 trillion won in Samsung Electronics Co., Ltd. and about 17.5 trillion won in SK Hynix, for a combined 55 trillion won. This month, however, they have turned back to buying semiconductors, purchasing 1.323 trillion won of Samsung Electronics Co., Ltd., 806.5 billion won of SK Hynix, and 300.1 billion won of Samsung Electronics Co., Ltd. Preferred Shares. While the overall net buying amount is not large, the concentration of funds in semiconductors is being seen as a sign of a shift in direction. Foreign investors, who sold heavily in the first quarter, appear to have returned to buying and are helping extend the April semiconductor rally.
Brokerages expect this semiconductor-heavy trend to continue for now. They say memory demand is expanding quickly as the AI market shifts from training to inference, and that rising profits from this trend are driving the index higher. In particular, because the recent market advance is based on improving semiconductor earnings rather than multiple expansion, they believe the memory-led rally will not fade easily.
A memory supply shortage is also adding to expectations for an improved industry outlook. In fact, supply has continued to lag demand, with some major customers meeting only about half of their memory needs. Market attention is now focused not only on short-term price gains, but also on the possibility that the trend could translate into stronger earnings over the medium to long term.
Chae Min-suk, a researcher at Korea Investment & Securities Co., Ltd., said, "The memory demand and supply shortage are not short-term cyclical phenomena, but structural and lasting changes driven by AI development." She added, "As long-term supply contracts reduce volatility in memory profits, memory companies can expect both earnings growth and valuation re-rating at the same time."
koreanbae@fnnews.com Bae Han-geul Reporter