“South Korea Is the World’s Craziest Stock Market”: Cars, Steel and Chemicals Lose Ground to China as Semiconductors Race Ahead Alone

The Wall Street Journal (WSJ) has described South Korea’s stock market as “the world's craziest stock market.” What drew the newspaper’s attention was an overheated market fueled by the concentration of market capitalization in Samsung Electronics and SK Hynix, single-stock leveraged exchange-traded funds (ETFs), and trading flows dominated by retail investors. The fact that these two stocks exert more than half of the influence over the index reflects an industrial structure in which the South Korean economy’s growth engine is concentrated in a single sector: semiconductors. While semiconductors have assumed an increasingly dominant role in underpinning exports, capital expenditure and economic growth, the competitiveness of other core industries—including automobiles, chemicals and steel—has weakened, leaving the KOSPI fully exposed to the semiconductor cycle’s volatility.