South Korea's Kospi hits record highs as valuations hit historic lows

South Korea’s benchmark Kospi index has surged about 80 % so far this year, repeatedly setting new record highs. Despite the rally, Bloomberg reports the index’s forward 12‑month price‑earnings ratio is roughly 6.4 ×, lower than the 6.8 × seen during the 2008 global financial crisis. The compression reflects explosive earnings from memory‑chip giants Samsung Electronics and SK Hynix, whose profits have surged on soaring demand for AI‑related data‑center components.

Analysts note the market is trading at a deep discount to regional peers – the Kospi’s PE is about one‑third of Taiwan’s Taiex – and refer to the long‑standing “Korea discount.” While some view the cheap valuation as a buying opportunity tied to the AI theme, others warn that the memory‑chip super‑cycle may be winding down, raising the risk of a sharp correction.

Strategists such as Francis Tan (Indosuez Wealth) advise exposure for portfolios lacking Korean tech, whereas Charu Chanana (Saxo Markets) cautions that upcoming cost‑optimisation by hyperscalers could curb memory prices. Recent sell‑offs driven by doubts over AI trade have pushed valuations even lower, leaving investors to weigh the upside of robust earnings against the uncertainty of the sector’s future.