Why Korea Rose 11% While the US Fell 3%: What Kospi's Decoupling Says About Global Capital Flows
While the S&P 500 fell 3% in 2026, Kospi surged 11%. Behind the 'market decoupling' phenomenon driven by surging semiconductor sector performance and ₩90 trillion in global capital inflows.
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February 2026 is redrawing the global stock market landscape. While the US S&P 500 fell 3%, Korea's Kospi rose 11%, clearly demonstrating a 'market decoupling' phenomenon.
TL;DR
- S&P 500 -3% vs Kospi +11% divergence confirmed since the start of 2026
- Semiconductor sector earnings surge: Samsung Electronics and SK Hynix contributed 54.4% of Kospi's gains
- ₩90 trillion in global capital inflows: Foreign and institutional net buying drove market level-up
- Brokerages raise targets: 6,000 threshold imminent amid 7,250~7,500 forecasts
What Happened
On February 20, 2026, Kospi closed at 5,808.53, up 2.31% (+131.28 points) from the previous day.[1] During the same period, US markets saw the S&P 500 decline 0.28% due to monetary policy uncertainty and Middle East geopolitical risks.[2]
The year-to-date return gap is even more dramatic. Kospi and Kosdaq rose 23.97% and 24.20% respectively, while the S&P 500 and Nasdaq managed only 1.80% and 1.91% gains.[3]
Looking at individual stocks, Samsung Electronics (+33.86%), SK Hynix (+39.63%), and Hyundai Motor (+68.63%) surged, while Nvidia posted only 3% gains since the year began, and MS (-10.3%) and Apple (-5.2%) actually declined.
Why Now: Three Diffusion Mechanisms
1. Semiconductor Supercycle Reignited
Exploding AI data center demand has led to soaring HBM (High Bandwidth Memory) prices. Samsung Electronics is negotiating HBM4 at $700 per unit, representing a price increase of over 30%.[4]
Over the past six months (August 2025 to February 2026), as Kospi surged 84.3%, market cap increases from Samsung Electronics (₩70.8 trillion) and SK Hynix (₩50.5 trillion) accounted for 54.4% of the total.[5]
2. Global Capital Convergence on Korea
Foreign investors net sold over ₩9 trillion in February alone for profit-taking, but institutions and retail investors absorbed the selling to maintain the uptrend. Bloomberg analyzed that "small investors in Seoul are starting to believe in the Kospi rally."[6]
JP Morgan raised its Kospi target to 7,500 points, while Korea Investment & Securities raised it to 7,250.[7]
3. Government Policy as an Independent Variable
The Lee Jae-myung administration's value-up policies (mandatory treasury share cancellation, corporate governance improvements) have fueled expectations for resolving the 'Korea discount'. Securities firms analyzed that "the domestic stock market's correlation with the US market has weakened unlike the past, based on independent upward momentum such as earnings momentum, liquidity, and government policies."[8]
Who's Involved
Beneficiary Groups
- Samsung Electronics & SK Hynix: Direct beneficiaries of HBM price increases, Samsung hit all-time highs
- Semiconductor ETF investors: Recorded 84% returns over the past six months
- Institutional & retail investors: Secured leadership by absorbing foreign profit-taking
Risk-Exposed Groups
- US Big Tech investors: MS down after 66% capex increase amid AI overinvestment concerns
- Dollar asset holders: Potential FX losses if dollar weakness continues amid tariff policy confusion
How Long Will It Last?
Short-term (1-2 months): High likelihood of continued strength
- Nvidia earnings announcement (2/25): Confirmation of AI demand could catalyze further gains in domestic semiconductor stocks
- Kospi 6,000 breakthrough: Technically feasible with 3.3% rise from current 5,808 level
Medium-term (3-6 months): Expected increased volatility
- Trump tariff resumption: Uncertainty increased after 15% reinstatement announced on 2/20
- Earnings slowdown risk: Momentum could weaken if HBM price increases slow after Q2
- Continued foreign profit-taking: Additional selling pressure possible after ₩9 trillion net selling
Long-term (6+ months): Structural change vs. temporary rally
Optimistic view: The Korea Development Institute (KDI) raised its 2026 growth forecast to 1.9%, citing strong semiconductor exports.[9] Moody's also maintained Korea's credit rating at Aa2 with a stable outlook.
Skeptical view: The IMF warned about Korea's aging population and fiscal risks,[10] and the concentration in the semiconductor sector (over 50% of Kospi market cap) could amplify shocks during corrections.
Secondary Issue: Is Market Decoupling a Signal or a Trap?
Historically, Korean and US markets showed a high correlation of over 0.7, but in 2026, the correlation coefficient has plunged below 0.3. This can be interpreted through two scenarios:
Scenario 1: Structural Decoupling
- Korea's strengthened position in AI semiconductor supply chain (Samsung & SK Hynix control 80% of HBM market)
- Mitigation of China risk (Korea benefits amid US-China conflict)
- 'Korea discount' resolution through value-up policies
Scenario 2: Temporary Divergence
- Possibility of Korea catching down after US market correction
- Tariff policy volatility could directly hit Korea's export-driven economy
- Retail investor concentration (overheating signal)