South Korean shares reached unprecedented heights as the KOSPI index surged 3.10% to close at 3,562.97, after touching an all-time intraday high of 3,565.96. The remarkable rally was primarily fueled by the country's leading chipmakers following their strategic partnership agreements with artificial intelligence powerhouse OpenAI.

Chipmakers Lead the Charge

Samsung Electronics, a cornerstone of the South Korean economy, saw its stock price climb over 4% to levels not seen since January 2021. Meanwhile, SK Hynix experienced an even more dramatic uptick, soaring more than 12% to reach its own all-time high. These two semiconductor giants, which collectively represent nearly 30% of the benchmark index's market capitalization, have inked deals to supply memory chips for OpenAI's data centers, signaling a potentially lucrative future in the burgeoning AI sector.

Broader Market Gains

The positive sentiment wasn't limited to the chipmakers alone. Several Samsung affiliates rode the wave of optimism:

• Samsung SDI
• Samsung C&T
• Samsung SDS

All posted sharp gains, contributing to the overall market surge.

Other major stocks also participated in the rally:

Foreign Investment and Economic Indicators

The landmark day saw significant interest from overseas, with foreign investors emerging as net buyers to the tune of 1.72 trillion won ($1.23 billion). This influx of foreign capital underscores the global appeal of South Korea's tech-heavy market in the current AI-driven investment landscape.

The semiconductor industry's strength is not just reflecting in stock prices but also bolstering the nation's economic indicators. South Korea's exports rose at their fastest pace in 14 months this September, largely attributed to the robust demand for semiconductors fueled by the ongoing AI boom.

Currency Impact

Amidst the stock market euphoria, the South Korean won also showed strength, appreciating 0.12% against the U.S. dollar. This currency movement suggests a broader confidence in the South Korean economy and its key industries.

As the KOSPI index etches new highs, all eyes will be on the sustainability of this AI-driven surge and its potential to further catalyze growth across South Korea's technology sector and broader economy.

South Korean shares soared to unprecedented heights on Monday, propelled by the government's decision to abandon a planned increase in capital gains tax on stock investments. The benchmark Korea Composite Stock Price Index (KOSPI) climbed 0.39% to close at a record 3,408.71 points, marking its tenth consecutive session of gains.

Government's Tax Decision Boosts Market Sentiment

President Lee Jae Myung's administration announced last week that it would not proceed with the earlier tax revision plan. The decision was made in response to concerns that the proposed tax hike could potentially undermine market performance. This move has been well-received by investors, as evidenced by the market's positive reaction.

Key Stock Performances

The market rally saw varied performances among major South Korean stocks:

Foreign Investment and Currency Impact

Foreign investors played a crucial role in the day's gains, emerging as net buyers with purchases worth 258.10 billion won. This influx of foreign capital underscores the attractiveness of the South Korean market to international investors.

The positive sentiment also extended to the currency market, with the Korean won strengthening 0.33% against the U.S. dollar, reaching 1,390.80 won per dollar.

Market Outlook

The government's decision to scrap the capital gains tax increase has been viewed as a supportive move for the stock market. By maintaining the current tax structure, the administration aims to preserve market stability and encourage continued investment in South Korean equities.

As the KOSPI reaches new heights, market participants will be closely watching for sustained momentum and any potential policy measures that could further bolster investor confidence in the South Korean market.