KOSPI Smashes Through 7,400 for the First Time as Samsung and SK Hynix Surge Together, Igniting Foreign Buying

The KOSPI opened above 7,000 for the first time in its history and kept climbing through the session, passing 7,300 and touching the 7,400 level (7,402 points) for a gain of more than 6%. The KOSDAQ moved the opposite way, slipping about 0.8% to trade in the low 1,200s, while the won held around 1,456 per dollar.

The hosts noted that Korean equities posted the world's best annual return last year at roughly 75%, and this year the market has matched that same gain in just five months. They pointed out that indices typically take time to clear round-number milestones like 5,000 or 6,000 due to market inertia, but the move through 7,000 this time came unusually fast.

The two hosts recalled a friendly wager they had made earlier over where the KOSPI's closing price would land when it first crossed 7,000 -- guesses included 7,300, 7,400 and 7,020 -- and joked that since the index blew past 7,400 intraday, all three predictions were effectively wrong already.

Countering the common assumption that a rising index gets "heavier" and harder to accelerate, they compared it to the physics principle that acceleration scales with mass -- meaning a larger, heavier index can actually gain more momentum once it starts moving. They said the Korean market is now replaying the pattern the US Nasdaq has shown in the past.

Goldman Sachs was cited as saying in a recent report that Korea shows overwhelmingly strong earnings-upgrade momentum within the Asia-Pacific region, with June earnings estimates for IT hardware holding at or slightly above May's already-elevated levels. It was also noted that this marks the eighth buy signal to trigger so far this year.

The hosts also discussed Warren Buffett's recent comments at Berkshire Hathaway's shareholder meeting, where he suggested the current market resembles a gambling frenzy. They countered that Buffett is sitting on a mountain of cash and holds no Korean stocks at all, arguing that the Korean market isn't a bubble but rather a market where corporate earnings are genuinely surging.

Samsung Electronics jumped 13% and SK Hynix rose 10%, driving the KOSPI's advance. Samsung's share price climbed to 265,500 won, up nearly 15% in a single day, pushing its market capitalization to roughly $1.1 trillion and 11th place globally. SK Hynix ranked 16th worldwide, trading at a market cap about $40 billion above Micron Technology's.

The direct trigger for Samsung's rally was a report that Apple is considering having Samsung Electronics and Intel produce its self-designed M-series chips to reduce its reliance on TSMC. As TSMC has gained more leverage over customers through recent price hikes and by prioritizing Nvidia's orders, Apple is said to be looking to diversify its supply chain toward Samsung and Intel, both of which can manufacture within the United States. On this news, Samsung became the second Asian company after TSMC to surpass a $1 trillion market cap.

The hosts framed this as more than an isolated headline -- as a signal that Samsung's foundry business may be due for a re-rating. Samsung is effectively several businesses combined into one -- memory, foundry, and consumer electronics -- and its foundry unit has long run losses. If large customers like Apple start placing orders, the unit could turn profitable and eventually be valued on its own as a rival to TSMC, they argued. They also likened it to Apple and Samsung, once estranged after a falling-out, drawing close again.

AMD's earnings, released after the US market close, also lent support to Korean chip stocks. AMD's revenue topped $10 billion, beating estimates, while earnings per share of $1.37 also came in above forecasts. Data center revenue jumped 57% year-over-year, and guidance for the next quarter far exceeded market expectations -- a sign that AI data center investment remains robust.

The hosts said AMD's strong results show that demand once concentrated almost entirely on Nvidia is now spreading across the industry. They also noted that AMD CEO Lisa Su recently visited Korea and met with Samsung Electronics Chairman Lee Jae-yong, calling it further evidence that global Big Tech firms are increasingly turning to Korean companies across both memory and foundry.

A US-listed memory semiconductor ETF (ticker DRAM) also helped drive favorable flows into Korean chip stocks. Samsung Electronics and SK Hynix together account for roughly half of the fund, which has surged more than 70% in the month since its launch. US investors previously had no way to buy Samsung or SK Hynix shares directly, and no semiconductor ETF held them either, making this DRAM ETF the only real proxy -- and it became extremely popular as a result.

With foreign investors now able to buy Samsung and SK Hynix shares directly, a new Korea-focused board has sprung up on the US stock community Reddit, where posts analyzing the two stocks' valuations are multiplying. On an MSCI dollar-denominated basis, the KOSPI's 12-month forward P/E is about 6.7 times, far below Taiwan and India's roughly 20 times, highlighting the market's relative undervaluation.

Foreign investors bought more than 1.5 trillion won worth of KOSPI shares on the day, underpinning the rally. Still, the hosts noted that foreign ownership of Korean stocks remains low overall, suggesting the current buying is more like early, fast-moving capital positioning ahead of what they called the "real game," which has yet to begin.

Financial regulators are reportedly working toward including Korea in the MSCI Developed Markets Index by June, pushing through regulatory changes to lower barriers for foreign investors. Measures under discussion include easing personal-information disclosure requirements for foreign stock trading and expanding the omnibus account system for foreign investors.

The hosts explained the MSCI index system using an analogy to a consumer price index built from the price of jajangmyeon and kalguksu noodles. MSCI, created by Morgan Stanley, divides global equity markets into developed and emerging categories and assigns each country a weighting based on market capitalization; large pools of passive money track these indices directly, so a country's inclusion or exclusion can dramatically shift capital flows.

Korea currently sits in the emerging markets index despite ranking 8th globally by market capitalization, held back by concerns over foreign investor access, restrictive regulations, and short trading hours. If promoted to developed-market status, Korea's weighting is estimated at 2-3% of that index, which analysts estimate could draw roughly $40 billion a year in new inflows -- equivalent to about 40-60 trillion won.

Korea was dropped from MSCI's watchlist for developed-market consideration under the previous administration. With the current government now pushing regulatory reforms, the hosts expect clarity on whether Korea re-enters the watchlist around June or July. They noted that index inclusion ultimately depends on the market itself being attractive, so the KOSPI's current strength is feeding a virtuous cycle that raises the odds of inclusion.

Separately, direct access to Korean stocks -- previously available only through US brokerages -- appears set to expand to brokerages based in Hong Kong as well. Given Hong Kong's status as one of Asia's top financial hubs, the hosts expect this channel to bring in a meaningful amount of additional capital.

Discussion turned to criticism that the bar for recognizing victims under Korea's special act for jeonse (long-term lease deposit) fraud remains too high. In the law's early days, a police complaint alone was often enough to gain recognition, but the standard has since tightened to require a case to be referred to prosecutors, making it steadily harder to have fraud formally recognized. It was noted that recognition is especially difficult unless there is clear, organized deception or a large-scale case like the notorious "villa king" scheme.

At the core of victim relief is recovering the jeonse deposit itself, and debate continues over whether it's appropriate for the government to fund that relief. Critics argue there's little basis for spending public money on what is essentially a private fraud dispute between individuals, and that singling out jeonse fraud victims for support is unfair to victims of other crimes, such as voice phishing or secondhand-marketplace scams -- a debate that has persisted since the law was first enacted.

In response, it was argued that rescuing even one victim first can be the starting point that eventually leads to helping ten, then a hundred. Refusing to act simply because not everyone can be helped at once, the argument goes, guarantees no progress is ever made. Housing was described as a core human need, and for many young people and those without homes, a jeonse deposit represents essentially their entire net worth -- making its protection one of the most urgent forms of relief there is.

The discussion recalled a 2021 public petition, from a time when jeonse deposits were expected to jump from 300 million won to as much as 550 million won, in which a desperate victim wrote that there was no legal way to earn that much money in a year without risking everything -- illustrating the backdrop against which the special act was first debated.

Korea's first publicly offered REIT dedicated to overseas real estate, JR Global REIT, has effectively defaulted. The REIT had purchased the Finance Tower in Brussels, Belgium, aiming to earn rental income and capital gains, but the building's valuation has been sharply written down as post-pandemic remote work eroded demand for commercial office space, triggering the current crisis.

As the building's appraised value fell, the lenders behind the REIT's debt pressured it over failing to meet loan-to-value covenants and imposed a "cash trap," seizing priority claim over rental income -- rapidly draining the REIT's cash flow. Ultimately it was unable to refinance roughly 40 billion won in maturing debt and had to file for rehabilitation. Because it was a publicly offered product held by tens of thousands of retail investors, trading has been halted and many now face the risk of losing their principal.

The episode underscored that paying a dividend is no guarantee of safety. Some funds pay distributions out of shrinking asset value, so investors were urged not to chase yield alone, but to understand exactly what assets and tenants back that income before investing.

More fundamentally, the hosts argued that commercial office space itself is playing a diminishing role in the AI era. Data centers are increasingly built on the outskirts of cities or even in deserts rather than downtown cores, and remote work and video conferencing have structurally reduced demand for office space -- making it a good time to reassess the risk in financial products tied to commercial real estate. They added that markets are unlikely to simply snap back to their pre-conflict state once the current geopolitical tensions end -- just as the world never fully reverted after the pandemic, prices, leading stocks, and investor psychology are all likely to look different once today's conflict subsides, and reading that shift early is key to avoiding losses.