More stocks fall despite KOSPI rally amid chip-sector concentration - Yonhap

South Korea’s KOSPI Composite Index has surged to record highs in 2026, but the rally has been driven almost entirely by a narrow group of semiconductor stocks, raising concerns about market concentration and broader participation. As of May 6, Samsung Electronics and SK Hynix accounted for 47.02% of the total market capitalization of the KOSPI, with their combined gains making up 77% of the index’s rise from 6,000 to 7,000 points. This trend has continued, with the two chipmakers now representing over 42% of the index.

Despite the KOSPI’s impressive performance, many other sectors have lagged behind. On the day the index hit 7,000, 679 stocks fell while only 200 rose. Sectors such as consumer goods, entertainment, and cosmetics have struggled to keep pace, with companies like APR Corp. and CJ ENM experiencing declines in performance. The concentration of gains in the semiconductor sector has also made the market vulnerable to shifts in sentiment or earnings revisions. Analysts warn that even a slight downward adjustment in chipmaker earnings could trigger a sharp correction.

The dominance of Samsung and SK Hynix has also drawn comparisons to other markets heavily reliant on a single industry or company. Goldman Sachs has highlighted the risks of over-concentration, noting that while the KOSPI reflects broader economic strength to some extent, its performance is increasingly tied to global AI cycles. Meanwhile, foreign investors have continued to reduce exposure to Korean equities, particularly in technology and auto stocks.

While analysts remain optimistic about the long-term potential of the semiconductor sector, the current structure of the KOSPI raises questions about sustainability and diversification. As the index continues to climb, the challenge for investors will be balancing the momentum of the chip sector with the underperformance of other parts of the market.