Why is South Korea's stock market called the "squid game stock market"?

The nickname refers to the high retail participation and significant risks taken by investors, reminiscent of the characters in the hit Netflix series who pursue quick riches.

What is driving the interest in South Korean tech companies like Samsung and SK Hynix?

These companies are anticipated to benefit from a multi-year supercycle in memory chips, driven by soaring artificial intelligence demand, with supply constraints expected to continue until 2027.

How is the South Korean government encouraging domestic investment?

The government plans to offer capital gain tax exemptions for retail investors who sell their overseas stock holdings and reinvest in the domestic market for more than a year.

Home / Business and Economy / Forget US Tech: Korea's Market Ignites

Forget US Tech: Korea's Market Ignites

11 Feb

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Summary

South Korea sees record retail investor activity.
Blue-chip tech stocks like Samsung and Hynix are undervalued.
Government offers tax breaks to encourage domestic investment.

South Korea's stock market is experiencing a surge in retail investor interest, contrasting with recent fatigue in US-based AI companies. This "squid game stock market," characterized by high retail participation and easing financial conditions, presents a diversification opportunity for global investors. Despite a historical "conglomerate discount" on the Kospi index, leading firms like Samsung Electronics and SK Hynix are showing promise, with supply constraints in memory chips expected to persist until 2027 due to AI demand.

Korean households possess significant financial reserves, including approximately $75 billion in local brokerage accounts and $170 billion in US equities. While these blue-chip tech stocks appear cheap internationally—Samsung and Hynix ranking high by operating profit but lower by market cap—a shift in investor sentiment is crucial. The government is introducing a program to exempt capital gains tax for retail investors who sell overseas holdings and reinvest domestically for over a year, aiming to spur repatriation.