South Korea Becomes World's 8th Largest Stock Market, Surpassing UK

South Korea has overtaken the United Kingdom to become the world’s eighth-largest stock market, driven by a surge in artificial intelligence-linked technology companies, according to Bloomberg data compiled in 2026. The total market capitalisation of Korean-listed companies surged more than 45 per cent in 2026 to US$4.04 trillion, while the UK’s market climbed about 3 per cent to US$3.99 trillion. The UK’s market was approximately double South Korea’s size as recently as the end of 2024.

AI-Driven Rally in Korean Equities

The surge in Korean stocks reflects the global pivot toward companies linked to artificial intelligence, which has driven gains in the country’s two largest listed companies: Samsung Electronics and SK Hynix. These memory-chip companies now account for more than 40 per cent of the total market capitalisation of the benchmark Kospi index, which comprises more than 800 constituents. President Lee Jae Myung’s push to bolster equity prices through corporate governance reforms and pro-market policies has provided additional support to the market rally.

Structural Rebalancing in Global Markets

“The rapid ascent of Korea and Taiwan reflects a structural rebalancing in global equity markets, driven by their dominance in AI hardware rather than tactical asset allocation,” said Francesco Chan, emerging markets and Asia Pacific investment specialist at JPMorgan Asset Management in Hong Kong. “As the backbone of the AI supply chain – with a ‘super-cycle’ advantage in high-end foundries and memory – these economies are attracting sustained structural capital inflows.”

Taiwan’s Parallel Market Ascent

The rally in Korean stocks mirrors that of Taiwan’s, which in April 2026 also overtook the UK to become the world’s seventh-largest share market. Taiwan’s gains have been powered by Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest chip foundry, which now accounts for approximately 45 per cent of the island’s benchmark gauge. Taiwan’s stock market value, now at US$4.48 trillion, is approaching that of Canada.

UK Market Performance and Structural Challenges

The UK’s FTSE 100 Index gained approximately 4 per cent in 2026, slightly less than the MSCI All Country World Index, but well behind the gains of markets benefiting from the AI boom. The UK’s equity market, Europe’s largest, remains dominated by traditional sectors including financials, consumer staples, and energy-and-mining firms.

Patrick Kellenberger, an emerging-market equity strategist at Lombard Odier in Geneva, noted that factors such as the potential of AI, global defense spending, and corporate governance reforms “support a much steeper trajectory for Korean and Taiwanese equities than for Europe.” He added that “Europe continues to struggle with commercialising and scaling innovation. Creating the conditions for innovative firms to emerge and grow is critical – but also time consuming.”

Economic Scale Considerations

While equity values have soared for Asian chip powerhouses, their underlying economies remain smaller than those of major European nations. South Korea’s gross domestic product is estimated at US$1.9 trillion in 2026, and Taiwan’s at US$977 billion, both well below forecasts for more than US$3 trillion for Germany, the UK, and France, according to International Monetary Fund estimates.

Analyst Outlook

Wall Street strategists remain bullish on Korean stocks, citing earnings upgrades from AI demand and favourable valuations. Goldman Sachs Group has raised its Kospi target to 8,000, primarily driven by an increase of more than 200 per cent in its 2026 earnings growth projection.