South Korea's KOSPI stock benchmark tops 5,000 on AI boom, market reforms

By Jihoon Lee and Cynthia Kim

SEOUL, Jan 22 (Reuters) - South Korean shares topped 5,000 points for the first time on Thursday, powered by chip firms and automakers on artificial intelligence optimism, reaching a level promised by President Lee Jae Myung in just over seven months since he took office.

The benchmark KOSPI .KS11 rose as much as 2.2% to an all-tiem high of 5,019.54 in morning trade, before it closed the session up 0.9% at 4,952.53.

The index has risen 18% so far this month, after emerging as the world's best performer in 2025 with a 76% jump - its biggest annual gain since 1999 - on a chip rally fuelled by surging demand for AI investments and capital market reforms.

The breach of the 5,000 mark also follows U.S. President Donald Trump backing away from his threat to slap new tariffs on European nations, easing market volatility and extending a rally in Korea's world-beating index.

Shares of chipmaker Samsung Electronics 005930.KS closed 1.9% higher, after rising as much as 5% on Thursday to a record high, while peer SK Hynix 000660.KS gained 2%. The two chipmakers account for a combined 35% of the benchmark index by market capitalisation.

Hyundai Motor 005380.KS has also been rallying this month to become the country's third-most valuable company, as investors cheered its newly unveiled humanoid robot technologies. The automaker surged as much as 7.5% on Thursday to a record level, before closing down 3.6% on profit-taking pressure.

Foreigners have purchased 1.2 trillion won ($816.69 million) of local shares so far this month, while institutional investors have purchased 1.7 trillion won. Non-financial firms also bought 1.5 trillion won, which mostly account for share repurchases by listed companies.

Investors' focus is now on if there will be a further climb beyond the crucial 5,000 mark or a shift to correction, analysts said.

"The bullish market trend this time is a fundamentals-driven one based on earnings growth, which makes the KOSPI still cheap," said Kim Jae-seung, an analyst at Hyundai Motor Securities.

Kiwoom Securities analyst Han Ji-young, however, said the pace could slow going forward, adding: "We also need to think about the fact that this year's rally has been led by certain sectors such as semiconductors, automobiles, shipbuilding and defence."

TACKLING "KOREA DISCOUNT"

President Lee said on Wednesday the domestic stock market was "still undervalued", adding that the boom in AI and semiconductors was at an unpredictable scale.

Under his "KOSPI 5,000" initiative, Lee has introduced a series of market reforms and tax measures aimed at boosting the domestic stock market and resolving the so-called "Korea Discount", since he took office in June 2025.

The Korea Discount refers to a tendency for domestic stocks to trade at lower valuations compared with global peers, due to factors such as opaque corporate governance structures and low dividend payouts.

"The KOSPI at 5,000 is not the destination but a new starting line," a spokesperson for the ruling Democratic Party said, vowing to keep pushing to improve market fairness and credibility.

The Lee administration and his Democratic Party last year revised the Commercial Act to better protect shareholder interests and plans to make share repurchases and cancellations a requirement for listed companies to boost shareholder value.

The government also aims to win developed-market status for the domestic stock market from global index provider Morgan Stanley Capital International (MSCI), with further loosening of foreign exchange restrictions planned for this year to improve foreign access.

($1 = 1,469.3400 won)