South Korea outpaces India as 6th largest stock market

South Korea has surpassed India to become the world's sixth-largest stock market by market capitalization, fueled by a sharp rally in semiconductor stocks that are benefiting from the global artificial intelligence (AI) boom, according to agency reports.According to information, the total market capitalization of companies listed in South Korea has surged 86% this year to reach approximately $5 trillion, overtaking India's market value of about $4.8 trillion. The rally has been led by technology giants such as Samsung Electronics and SK Hynix, both of which have emerged as major beneficiaries of growing demand for AI-related infrastructure.
South Korea's rise in global equity rankings comes after it moved ahead of Canada and several European markets earlier this year, highlighting investor enthusiasm for companies supplying critical components to the rapidly expanding AI ecosystem.Together with Taiwan, South Korea has emerged as one of the key Asian technology hubs reshaping global equity markets as investors increasingly channel funds into semiconductor and AI-linked companies."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. He added that the trend also reflects a broader shift in global capital flows toward major Asian economies that are playing an increasingly significant role in shaping future technology and economic growth.Analysts attribute South Korea's market gains to a combination of strong demand for AI-related technology and corporate reform measures pursued by President Lee Jae Myung. The benchmark Kospi Index has significantly advanced this year, supported largely by gains in semiconductor stocks.
However, market experts have cautioned that sustaining the momentum will require broader participation beyond a handful of large-cap technology firms. Ross McGarry, Senior Investment Analyst at Asset Value Investors, noted that much of the rally has been driven by the memory-chip cycle and the strong performance of Samsung Electronics and SK Hynix.India, meanwhile, has faced headwinds from a weakening rupee, persistent foreign portfolio outflows, and a limited presence of companies directly linked to the AI infrastructure boom. Rising energy costs have also contributed to inflation concerns, weighing on investor sentiment and growth expectations.
According to agency reports, foreign investors have sold roughly $26 billion worth of Indian equities this year, while the country's benchmark indices have declined around 11%, putting them on track for their first annual loss in more than a decade."The India growth story has increasingly lost momentum in investors' minds as the country contends with mounting domestic and external challenges," Gan said, adding that infrastructure bottlenecks continue to hinder the country's ambitions in advanced manufacturing.
Despite the stock market setback, India's economic fundamentals remain stronger than South Korea's in several respects. According to estimates from the International Monetary Fund, India's economy is valued at about $4.15 trillion and remains one of the fastest-growing major economies in the world, compared with South Korea's gross domestic product of approximately $1.93 trillion.Stanley Tang, Senior Portfolio Manager at Sumitomo Mitsui DS Asset Management, said the long-term investment case for India remains intact, particularly as rising income levels are expected to boost domestic consumption over time."Long-term thesis still holds, but inflation is creating a near-term headwind," Tang said.While South Korea's stock market has gained from its dominant position in the global semiconductor supply chain and the AI investment wave, analysts believe India's long-term growth prospects continue to be supported by its large domestic market, expanding middle class, and strong economic growth trajectory.