The world's "most bullish stock market" is witnessing a frenzied spectacle.

Amid the surging bull market, South Korea's nationwide enthusiasm for stock trading has reached fever pitch. Data compiled by Toss Securities reveals that in the first quarter of 2026, new account openings among South Koreans under the age of 18 surged nearly tenfold compared to the same period last year. According to the Korean Financial Investment Association, as of mid-May, margin balances in the domestic stock market hit a record-high 36.3 trillion KRW.

Notably, volatility in the South Korean market is intensifying. On May 19, the benchmark KOSPI Index plunged nearly 5% intraday before closing down 3.25%, yet still posted a year-to-date gain exceeding 72%, leading all major global indices. Among them, two semiconductor giants—Samsung Electronics and SK Hynix—both declined, ending the day down 1.96% and 5.16%, respectively.

South Korea’s Nationwide Stock Trading Frenzy

According to a recent report by Bloomberg, South Koreans are entering the market on an unprecedented scale. Data from Toss Securities shows that new accounts opened by individuals under 18 in the first quarter rose nearly tenfold compared to the same period last year.

It is worth noting that South Korea imposes no age restrictions on stock trading; minors may open brokerage accounts and invest in equities with consent from their parents or legal guardians.

Bloomberg reports that nowhere is the South Korean public’s obsession with the stock market more evident than on social media platforms. The flood of trading advice and investment returns shared by influencers and retail investors is continuously amplifying the phenomenon of “fear of missing out” (FOMO) across the population.

Fabien Yip, IG’s Sydney-based market analyst, stated that the South Korean market is being driven by FOMO sentiment, particularly concentrated in AI (artificial intelligence) and semiconductor-related assets.

Vey-Sern Ling, Director General at Union Bancaire Privee, noted that the strong performance of memory chip manufacturers Samsung Electronics and SK Hynix has long been a key factor attracting domestic investors.

Data from the Korean Financial Investment Association shows that as of mid-May, margin balances in the domestic stock market reached a record 36.3 trillion KRW—a 32% increase from the end of December last year.

Bloomberg observed that this latest rally in the South Korean market has few precedents, both domestically and globally. This leveraged-driven surge has propelled the market into a leapfrog development phase, elevating South Korea to the seventh-largest stock market in the world.

Professor Jaewon Choi from Seoul National University remarked: “Today, an increasing number of South Koreans believe that traditional pathways to upward social mobility are no longer viable—only speculative assets can fulfill this aspiration. Investors are now aggressively buying stocks such as SK Hynix and Samsung Electronics, viewing them as optimal vehicles for rapid wealth accumulation.”

The return of South Korea’s 14 million day traders has further fueled the market uptrend. After largely remaining on the sidelines for much of 2025, they have gradually been drawn into what many perceive as a once-in-a-lifetime opportunity, now re-entering the market en masse. To date this year, retail investors have injected approximately 37.7 trillion KRW (25.3 billion USD) into local equities.

Notably, foreign investors continue to exit the South Korean market. According to industry-compiled data, as of mid-May, overseas investors had net sold 11.5 billion USD worth of South Korean stocks during the month—potentially marking the third-largest single-month capital outflow on record, trailing only February and March’s unprecedented sell-offs.

Year-to-Date Gains Exceed 72%

On the market front, driven by powerhouse semiconductor firms Samsung Electronics and SK Hynix, the KOSPI Index has continued its strong momentum. As of the close on May 19, the index posted a year-to-date gain of 72.55%.

However, recent market volatility has sharply increased, prompting growing concerns among investors about whether this rally can be sustained.

Analysts point out that while Samsung Electronics and SK Hynix have provided robust valuation support through record-breaking profits, non-tech sectors with stagnant earnings growth are increasingly being pushed toward bubble territory. William Bratton, Head of Cash Equities Research for Asia-Pacific at BNP Paribas, highlighted that since September 2025, non-technology companies have contributed only 4% of total profit growth over the past 12 months. When earnings growth is almost entirely concentrated in just two semiconductor giants, while valuations across hundreds of other stocks simultaneously rise, structural pricing imbalances become inevitable.

A second layer of vulnerability in the South Korean market stems from historically unprecedented leverage participation by retail investors. Leverage enthusiasm in derivatives markets has also peaked. By May 7, margin requirements for exchange-traded derivatives reached 38.26 trillion KRW—setting a new all-time high.

Kenny Kim, CEO of Meridian One Asset Management, warned that despite repeated new highs, volatility indicators remain elevated, indicating the market is in a “melting rally” phase driven by FOMO and extreme positioning. Leveraged and margin trading further amplify price swings. He cautioned: “If retail inflows or systemic trading flows significantly slow down—or if hedge funds reduce their most profitable large positions—the market structure could become substantially more fragile.”

Nevertheless, some institutions remain optimistic about the outlook for the South Korean market. KB Securities has raised its year-end target for the KOSPI Index by 40%, from 7,500 points to 10,500 points. Goldman Sachs maintains an “overweight” rating on South Korea, raising its 12-month target for the KOSPI Index from 8,000 to 9,000 points. JPMorgan even projects a target of 10,000 points under its “bullish scenario”.

The basis for these optimistic projections lies in the unprecedented boom currently underway in South Korea’s semiconductor industry. In early May (1–10), semiconductor exports surged 149.8% year-on-year to 8.5 billion USD—setting a new historical record for the period, accounting for 46.2% of total exports during the same timeframe. The Korea Development Institute (KDI) has revised its 2026 economic growth forecast upward to 2.5%, with roughly half of that figure directly attributable to semiconductor export momentum.

Original Source: Securities China