Can Korean Stocks Continue Their Record-Topping Run?

Korean equities, Asia’s top performers this year by a significant distance, rose to a record high Thursday, buoyed by auto and tech stocks. Those sectors gained ground on optimism over tech investment as well as prospects for a U.S. trade deal.

The Kospi climbed 2.5% on Thursday, taking it to 3,748.37 at the close. That takes the year-to-date gain for the index to 56.3%. Hong Kong is the next-best performer in Asia, up 31.9% this year.

What’s Driving the Gains in Seoul?

The Korean Composite Stock Price Index, or Kospi for short, is a “Korean S&P 500,” capturing the performance of all common stocks trading in Seoul. It currently includes 982 components.

I wrote in my last column that Asian investors are being far more circumspect in their trading than their U.S. counterparts. That remains true, but they are generally encouraged by any signs of improving trade relations both within Asia and for exports to the United States.

Investors in Seoul Thursday were encouraged by comments from U.S. Treasury Secretary Scott Bessent that he expects an announcement on a trade deal with South Korea within the next 10 days. That’s a timeframe supported by the upcoming APEC Summit, which South Korea will host from October 31 to November 1.

While Korea and the United States agreed a framework deal on July 30, with Korean tariffs set at 15% including on automobiles, it’s not clear how Seoul will make the US$350 billion that it promised in investments into the United States. Seoul wants to avoid foreign-exchange complications and proposes a currency swap rather than paying upfront cash.

Chipmakers Leading the Charge

The Kospi is heavy on heavy industry, exporters and chipmakers in particular.

By far its largest constituent is Samsung Electronics (KR:005930), up 2.8% Thursday, and 83.0% this year, helping explain a hefty proportion of Seoul’s outperformance.

Samsung Electronics also hit a record, closing in Seoul at 97,700 won to eclipse a 2021 high. Earlier this week, it posted its biggest quarterly profit in three years, although that caused some selling on the news from long investors locking up profits.

The flagship of the Samsung chaebol, or conglomerate, suffered in recent years for its emphasis on cheaper DRAM and NAND memory chips, and its slow reaction to the Artificial Intelligence boom. But it has caught up in 2025 as prices recover and as it plays catchup in the high-bandwidth memory (HBM) chip field.

SK Hynix (HXSCL) (KR:000660) had stolen a lead in that field. Hynix is the second-largest company listed in Seoul, with a US$204.2 billion market cap to the US$431.4 billion for Samsung, boosted by a phenomenal 164.3 advance this year, iced with a 7.1% gain Thursday.

Samsung has recently secured an order from Advanced Micro Devices  (AMD)  for its HBM chips, and is awaiting approval to produce chips for Nvidia  (NVDA) . Both Samsung and Hynix struck agreements earlier this month to supply OpenAI’s Stargate project with chips.

Battery and Auto Stocks Climb

The third-largest Korean company by market cap, battery maker LG Energy Solution (KR:373220), also shot up Thursday, advancing 8.8%. It estimated earlier this week that Q3 profits rose around 34%, as the supplier to Tesla  (TSLA)  and General Motors  (GM)  saw U.S. demand spike before government incentives ended September 30. It should also benefit from any easing of trade terms.

Korea’s leading car companies also spiked. Hyundai Motor (KR:005380) leapt 8.3%, while affiliate Kia (KR:000270) closed up 7.2%. Whereas chipmakers are on a long bull run, the automakers see their shares oscillate based on tariff implications, meaning Hyundai stock is up “only” 14.4% this year, and Kia up 9.6%.

The car companies are upping U.S. investment, to the tune of US$21 billion for Hyundai. But those efforts were undermined by the immigration raid last month on the EV battery factory that Hyundai Motor and LG Energy Solution are building as a 50-50 joint venture in Georgia.

Taiwan Record Close Ahead of Earnings

Taiwan’s stock market also closed at a record high Thursday. The Taiex ended the day up 1.4% ahead of strong numbers from its largest component.

Taiwan’s market also revolves around the fortunes of its biggest company. Chip foundry market leader Taiwan Semiconductor Manufacturing Co.  (TSM)  (TW:2333)  reported a 39.0% rise in quarterly profit after the close in Taipei. It also raised its revenue forecast for the year from around 30% to mid-30%, with Q3 sales up 30.3%.

TSMC shares are up 39.4% so far this year, and after a 1.4% gain in Taipei look set to rise on Wall Street. That’s lifting the Taiex benchmark to a 21.1% gain for 2025.

Japan Stocks Gain on Coalition Talk

There’s grounds for optimism also in Japan. The ruling Liberal Democratic Party (LDP) is in advanced talks over forming a coalition with the right-wing Japan Innovation Party (JIP), or Nippon Ishin no Kai.

Japanese stocks soared to records of their own after the LDP elected Sanae Takaichi as its leader. She is a social conservative who favors low interest rates and high government stimulus spending, both of which should favor Japanese equities. But her prospects of becoming prime minister in a parliamentary vote later this month were thrown into chaos after the LDP’s existing coalition partner, Komeito, said it was walking away and would not support Takaichi.

The LDP lacks a majority in either house of Japan’s parliament. So it now needs a new partner. The JIP shares some ideology with Takaichi, such as reforming Japan’s post-war constitution to allow it to have official armed forces. Still, opposition parties have held separate talks about forming their own coalition.

Thursday at least, one analyst gives Takaichi a 75% likelihood to become the next prime minister. There’s no timing yet set for the vote, but if she succeeds, we should see further gains in Japanese stocks.

The Topix, which like the Kospi captures broad-market performance for all main stocks in Tokyo, rose 1.8% Thursday, and is now up 16.2% this year. The Nikkei 225, which captures the performance of “Japan Inc.” and its blue-chip large companies, rose 1.3%, taking its 2025 gains to 22.8%.

For now, East Asian markets appear set to push to further highs. But markets equally hinge on pronouncements largely out of the White House on trade. It is likely all parties will want to ensure smooth sailing as we move toward the APEC Summit at the end of this month.

At the time of publication, McMillan was long TSM.