South Korea overtakes India as world’s sixth-largest stock market on AI-fuelled chip rally

South Korea has overtaken India to become the world’s sixth-largest stock market, as a powerful rally in semiconductor stocks tied to the global artificial intelligence (AI) boom lifted the country’s market capitalisation to US$ 5 trillion.

The total value of South Korean-listed companies has surged 86 percent this year, surpassing India’s US$ 4.8 trillion market value. The gains have been led by chipmakers Samsung Electronics and SK Hynix, which have benefited from soaring demand for AI-related infrastructure.

The shift indicates how investors are increasingly directing capital towards economies positioned at the heart of the AI supply chain.

“The rally highlights the continued relevance of South Korean technology companies in the next wave of technological innovation,” said Gerald Gan, chief investment officer at Reed Capital Partners as reported by Bloomberg.

“It also reflects a broader shift in global capital flows toward major Asian economies, which were once overshadowed by Western markets but are now playing an increasingly prominent role in shaping the future of technology and growth,” he said.

South Korea’s market has also drawn support from President Lee Jae Myung’s corporate reform agenda, with the benchmark Kospi index already surpassing his earlier target of 5,000 points.

Analysts, however, cautioned that the rally remains concentrated in a handful of technology stocks.

Meanwhile, India’s market has come under pressure from a weakening rupee, rising inflation concerns and foreign investor outflows. Global funds have sold around US$ 26 billion worth of Indian equities this year, contributing to an 11 percent decline in the country’s benchmark index.

Despite the market setback, India’s economy remains larger at US$ 4.15 trillion, compared with South Korea’s US$ 1.93 trillion, according to IMF estimates.