FTSE Russell: Semiconductor + AI Dual Drive Korea Stock Market Leads Asia-Pacific

FTSE Russell's Global Investment Research Managers Zhang Ruopeng and Tae Yoon Kim wrote that the South Korean stock market recorded a total return of up to 96% in 2025, showing a very impressive performance, and continued its positive momentum in 2026. As of April 15th, South Korea is one of the best performing markets in the Asia-Pacific region (+48.7%). The strong performance is attributed to the significant recovery of the South Korean economy in 2025, particularly benefiting from the strong growth in semiconductor exports, which provided powerful support for the overall economic momentum and stock market performance. South Korea's ongoing progress in corporate governance reform, combined with its global leadership in the field of artificial intelligence (AI) hardware, is continuously strengthening the sustainable long-term investment potential of the South Korean stock market. Artificial Intelligence Supports the South Korean Market FTSE Russell pointed out that from the fourth quarter of 2023 to the first quarter of 2025, the South Korean economy showed a gradual slowdown in growth, with weakening exports becoming a major obstacle against the backdrop of global economic cooling. However, the early loading effects of exports drove a temporary rebound in South Korea's exports in the second quarter of 2025, which further strengthened in the second half of 2025, primarily driven by rapid growth in demand for artificial intelligence-related technologies, significantly boosting semiconductor exports and becoming an important force supporting the economy and the market. Since May 2025, South Korea's semiconductor exports have continued to grow by double digits. Against the backdrop of the accelerated global AI investment cycle, strong demand for artificial intelligence has significantly driven the growth of High Bandwidth Memory (HBM) in South Korea. Currently, South Korean companies collectively hold about 80% of the global market share in the HBM sector. In contrast, South Korea's overall performance in automotive exports in 2025 remained relatively stable. However, it is worth noting that South Korea's exports of cars to non-U.S. markets continued to grow, with a focus on electric vehicles. The steady improvement in fundamentals was also reflected in stock performance in 2025. Not only did exports and economic growth rebound synchronously in 2025, but the South Korean stock market also reflected an overall improvement in the macro environment. After a lackluster performance in 2024, the South Korean stock market significantly outperformed Asia-Pacific (+28%) and global stock markets (+23%) in 2025. In U.S. dollar terms, the total return was as high as 96%. From an industry perspective, the technology sector (+90%) and telecommunications sector (+31%) were the leading forces in 2025, and this positive momentum continued into 2026. Source: FTSE Russell and London Stock Exchange Group (LSEG). Data as of April 15, 2026. Past performance is not indicative of future returns. Hardware Drives the South Korean Stock Market FTSE Russell believes that the development of artificial intelligence has shifted the technological leadership from software to hardware. Hardware companies benefit from tangible demand, secured orders, and short-term cash flow. Therefore, markets, such as Japan, South Korea, and Taiwan, with a focus on hardware and telecommunications equipment, have performed well. In addition to long-term factors such as structural policy reforms, the explosive demand in the memory chip sector driven by AI has become a significant catalyst for the South Korean stock market's impressive outperformance in 2025. As shown in the figure below, the technology and telecommunications sectors have significantly outperformed other industries. Source: FTSE Russell and London Stock Exchange Group (LSEG). Data as of April 15, 2026. Past performance is not indicative of future returns. Strategic Partnerships Strengthen Growth FTSE Russell stated that South Korea's leading position in the high-performance memory sector continues to strong profit performance and positive future performance guidance for SK Hynix and Samsung Electronics. In addition, Nvidia announced a strategic partnership to deepen cooperation with the South Korean government and major companies including Samsung Electronics, SK Hynix, SK Telecom, and Hyundai Motor Company (in the field of autonomous driving) to further develop infrastructure and technology related to artificial intelligence.