KOSPI Has Jumped 87%, but the Index Has Been Driven by Just Six Stocks [Why the Market Is Rising]

[Financial News] Although the KOSPI is made up of more than 900 stocks, analysis shows that the index is effectively being moved by only about six names. As money and profits concentrate in Samsung Electronics and SK Hynix, the gap between large-cap stocks and small- and mid-cap stocks is widening further.
■ Profits and money flow into semiconductors, deepening polarization
According to the Korea Exchange on the 4th, the KOSPI closed at 8,088.34 on the 3rd, up 5.76% from the previous trading day. That marks a gain of 87.68% from the Jan. 2 closing level of 4,309.63.
The most notable change is the market concentration indicator. According to FnGuide, the KOSPI market concentration index, or HHI, rose to an all-time high as of the previous day. Converted into an effective stock count, it stands at 5.75, meaning that, when market capitalization weights are considered, roughly six stocks are effectively determining the direction of the entire KOSPI.
This concentration intensified further after the launch of a single-stock leveraged exchange-traded fund (ETF) on May 27, as retail money flowed into Samsung Electronics and SK Hynix, while foreign investors also continued to trade heavily in semiconductors.
The flow of funds also moved toward semiconductors. Shinhan Investment & Securities analyzed that 79% of the increase in KOSPI market capitalization in the first half came from semiconductors, even as the index rose more than 100%. The semiconductor-led rally was so clear that separating semiconductors from non-semiconductors was more meaningful than dividing the market into KOSPI and KOSDAQ.
The concentration in large-cap stocks is also visible in corporate earnings. According to Yuanta Securities Korea Co., Ltd., the 12-month forward net profit consensus for KOSPI-listed companies rose by 1.18 trillion won from the previous week, while KOSDAQ estimates declined.
Kang Jin-hyuk, a senior researcher at Shinhan Investment & Securities, said, "In the first half, the market repeatedly shifted between large-cap concentration and sector rotation, but in the end, semiconductors led the market." He added, "If the semiconductor relay momentum continues in the second half, the large-cap-led market trend is likely to persist."
Lee Jae-won, a researcher at Yuanta Securities Korea Co., Ltd., said, "The fundamental reason stock prices become concentrated in certain names is that profits ultimately flow to one side." He added, "A strategy centered on KOSPI large caps where both earnings and liquidity are confirmed, such as semiconductors, IT hardware and banks, remains effective."
■ The rally may continue, and the concentration could become even stronger
Brokerages expect the semiconductor-led strength to continue for the time being.
Samsung Futures forecast that the semiconductor-led rally will continue in the second half, supported by expanded investment in AI infrastructure and improving earnings. However, it warned that caution is needed if aggressive capital inflows deepen overheating in the stock market and intensify stock concentration.
Market experts say that the longer the semiconductor-driven rally lasts, the more likely it is that non-leading stocks in the KOSPI and the relative neglect of KOSDAQ will deepen as well.
An official from the securities industry said, "In the first half, the KOSPI rose more than 100%, while KOSDAQ posted negative returns, confirming the polarization." The official added, "If semiconductor-led concentration continues in the second half, the index may keep hitting record highs while investors' perceived returns remain low."

dschoi@fnnews.com Choi Du-seon Reporter