Just a few days ago, on April 27, I called the semi-fueled rally in South Korean equities “mind-bending.”
Local shares had just hit yet another new record high, pushing the benchmark’s rally from the Iran war lows to 30%.
In light of the latest leg up for chip stocks, which included a further vertical ascent for Intel on news that the company, along with South Korean national champion Samsung, is in preliminary talks to help Apple diversify its supply chain, I figured it was worth checking back in on the Kospi.
Spoiler alert: South Korean shares are up another 13% since I last wrote about them just a few sessions ago. The YTD gain for the index is approaching 75%.
The updated figure above shows you the YoY advance. It’s nearly 200% now.
This is what happens when a couple of chipmakers comprise 40% of your national equity benchmark and chips become “the new oil.”
Samsung, spurred along by the Apple news (or I guess I should say the Apple speculation), is up 23% this week alone.
If it holds, that’d be the best weekly advance for the shares since 2008. SK Hynix is up an even more impressive 29% this week, bringing its YTD gain to — drumroll — 144%.
For some observers, this is too much to bear (get it?). “The [Samsung] rally added $190 billion in market cap based on a potential deal,” JonesTrading’s Mike O’Rourke marveled, adding that the rally looks even dicier when you consider a looming workers’ strike. “The union is demanding 15% of operating profit,” O’Rourke remarked.
I don’t disagree with the sentiment. Honestly I don’t. But the older I get — which is to say the more booms and busts I witness and participate in — the more reluctant I am to fade momentum during upswings.
Simply put, and without wanting to cast aspersions: You don’t short bubbles. You just talk about shorting bubbles. If anything, you buy into bubbles, with leverage, and hope you have the good sense to sell at the top, to the last in a succession of greater fools.
It goes without saying that trees don’t grow to the sky. It’s entirely possible that the greatest fools are buying right now, which is to say this may be the top in certain names or even for entire local markets, like South Korea’s.
But, back at the ranch, the rally does have a fundamental underpinning both backward- and forward-looking.
The figures above show you, neatly, what I’ve described here on several occasions over the past week or so: Big-cap US profit growth is on an upswing both on a trailing and forward basis.
“US earnings confirm a broad-based profit boom,” SocGen’s Manish Kabra, who earlier this week entertained an intra-firm “Bull vs Bear debate” with colleague Albert Edwards, wrote Thursday.
Kabra went on to document “record EPS beats, all-time high margins and sharply upgraded 2026 growth expectations.”
“AI-led demand and capex are reinforcing momentum,” he said. “Profits remain the anchor for US equities, with any Fed rate cuts likely to turn a bullish market into a raging bull.”
A bit of history worth mentioning. Apple once relied on Intel to produce the chips used in their devices. Intel offended them by trying to issue their own mobile products so Apple was easily seduced by TSMC? Nope by SAMSUNG. The Samsung chips were fine, but the good folks in Cupertino became cautious about having the logic chips in their mobile phones being manufactured by their main competitor in the handset market. So they finally started to source all of their logic chip needs from a single company in Taiwan.
As time passed, Tim Cook & company actually started to worry about the rising geopolitical supply chain risk they had created. Concurrently their largest shareholder, Berkshire Hathaway, sold all of their holdings of TSM below $100, likely for the same reason.
Finally TSMC recognized the growing risk-off sentiment here in the US and was coerced kicking & screaming into building fabs here in the US. Over the strong opposition from the Taiwan government who rightfully saw advanced chipmaking as the only thing that guaranteed that the US and other nations would protect them from the threat only 90 miles away.
TSMC was getting pulled by both sides, having to appease Biden & then Trump while assuring their government that they would not produce their two most recent logic chip production designs off of the island. I scolded here a few years ago for citing “industry sources” which indicated that Tim Cook himself met with the then CEO of TSMC and demanded that the company change course and so TSM promised to accelerate the production of later nodes in Phoenix. TSMC had to listen because Apple had become their largest customer after the US government forced the company to stop producing chips for Huawei, which at the time was their largest buyer. It’s been tough sailing for the management of TSMC.
So the reports you cited are not all that much of a bull market overreach.