SOUTH KOREA'S TRILLION-DOLLAR CHIP BOOM RAISES RISK FLAGS

The Kospi index has reached record highs, overtaking equity markets in the UK, Germany, and France. The gains follow SK Hynix and Samsung Electronics hitting trillion-dollar valuations as artificial intelligence drives global chip demand. However, experts highlight structural vulnerabilities. The index's heavy reliance on these two semiconductor giants creates exposure to industry cyclicality and geopolitical tensions. Chip markets have historically swung between oversupply and scarcity, potentially amplifying volatility for South Korea's broader economy. The concentration also limits portfolio diversification benefits. While AI optimism has fueled current gains, analysts caution that rapid scaling of chip capacity could trigger overcapacity, repeating past downturns that have hammered semiconductor stocks. South Korea's chipmakers remain technological leaders with strong export demand. Yet a more balanced economic base would insulate the market from sector-specific shocks.