Finance Minister Koo Yun-cheol speaks during a press briefing at the Government Complex Sejong, Monday. Courtesy of Ministry of Finance and Economy
The recent KOSPI rally is being driven more by improving semiconductor industry conditions and corporate earnings than by speculative overheating, Finance Minister Koo Yun-cheol said Monday, as the benchmark index extended its record-breaking run above the 7,800 mark.
Speaking at a press briefing, Koo said the Korean stock market remains undervalued compared with major advanced markets based on the price-to-book ratio (PBR). He added that the ongoing semiconductor supercycle fueled by rising artificial intelligence (AI) demand, along with strong earnings from Samsung Electronics and SK hynix, reflects “real fundamentals” supporting the market rally.
“Statistically, the domestic stock market is still valued at a lower level than advanced markets in terms of PBR,” Koo said. “Views on the semiconductor market may differ depending on how the AI cycle unfolds, but considering the large volume of advance orders already placed through next year, I believe global and domestic investors are increasingly recognizing the potential of the Korean stock market.”
Citing the first-quarter operating profits of 57.2 trillion won ($38.8 billion) for Samsung Electronics and 37.6 trillion won for SK hynix demonstrate, the minister noted the rally is backed by tangible fundamentals rather than speculative momentum alone.
Samsung Electronics posted record quarterly operating profit in the first quarter, with earnings surging more than 750 percent from a year earlier on booming AI chip demand. Operating profit at SK hynix also jumped 405.5 percent year-on-year, marking the company’s highest-ever quarterly performance.
Koo, however, stressed that the government will continue to closely monitor the market to prevent unfair trading practices or distortions from emerging during the rapid market upswing.
Regarding growing concerns over the labor union’s planned 18-day strike beginning May 21 at Samsung Electronics, Koo urged labor and management to resolve their dispute through dialogue, emphasizing that Korea should not jeopardize its economic opportunities during the current semiconductor boom.
“At a time when Samsung’s chip business is benefiting from strong market conditions, it is important for Korea to capitalize on this momentum in a way that supports the broader economy,” he said, expressing hope for a mutually acceptable agreement between the two sides.
Koo also warned against prolonged labor tensions, saying it would be regrettable for the country to lose a strategic opportunity because of internal conflict while countries around the world are increasingly relying on Korean semiconductor supplies.
Management and the labor union at Samsung Electronics have been engaged in wage negotiations since December, but talks broke down in March after the two sides failed to narrow differences over performance-based bonuses. Concerns have been raised that a walkout could disrupt production.
