South Korean Equities Surpass Canada to Become World’s Seventh-Largest Stock Market

Propelled by the relentless global demand for AI-driven semiconductors, the South Korean stock market has overtaken Canada to claim the spot as the world's seventh-largest equity market.

 

According to industry data, the total market capitalization of South Korean listed companies has surged 71% this year to $4.59 trillion, eclipsing Canada’s $4.5 trillion valuation, which saw a more modest 7% increase over the same period.

 

The rally reached a fever pitch on Wednesday as the benchmark KOSPI index soared 6.5% in a single session.

 

This marks the eighth time this year that the index has recorded a single-day gain exceeding 5%, a stark contrast to last year when that threshold was met only once.

 

 

Much of this momentum is anchored by the "Big Two" memory giants: Samsung Electronics recently surpassed the $1 trillion market cap milestone, while SK Hynix has seen its share price double this year.

 

Together, these two heavyweights account for 45% of the KOSPI’s total weighting, effectively allowing the South Korean market to ride the tailwinds of the semiconductor supercycle past major European markets like the UK and France.

 

This divergence in ranking highlights how index composition is dictating the fortunes of national markets. While the tech-heavy KOSPI has gained over 70% year-to-date, the S&P/TSX Composite Index—heavily weighted toward resources and financial sectors—has lagged with a 7% return.

 

"The market capitalization of South Korea is poised for further expansion driven by the AI-led memory cycle," noted Ha SeokKeun, Chief Investment Officer at Eugene Asset Management, adding that Canada’s growth remains constrained by its overexposure to energy and financials.

 

The surge is also supported by massive capital inflows, with overseas retail and institutional investors purchasing over $2 billion in South Korean equities on Wednesday alone—nearly touching the historical record set last October.

 

Beyond the AI boom, market participants point to South Korea’s corporate governance reforms and pro-market policies as significant catalysts.

 

Furthermore, while Middle Eastern geopolitical tensions have introduced oil price volatility, they have also refocused attention on the global competitiveness of South Korean shipbuilders and defense firms.

 

Stanley Tang, Senior Portfolio Manager at Sumitomo Mitsui DS Asset Management, emphasized that the rally is underpinned by multiple tailwinds.

 

"Profitability for memory giants is at record highs due to insatiable demand for AI computing power," Tang stated. "Simultaneously, South Korean shipbuilders are benefiting from a shipping bull market triggered by geopolitical shifts and lower steel costs."