Here's the latest stock market to be leapfrogged by South Korea in the world rankings

By Jules Rimmer

South Korea's stock-market capitalization has overtaken Canada's this week

South Korean equities have now overtaken Canada by market cap.

Canada has become the latest country to be overtaken by South Korea in the league table of the world's largest stock markets by capitalization.

Having powered past the U.K. only last week, the Asian Tiger economy now only ranks behind the U.S., China, Japan, Hong Kong and India, after its benchmark index notched up another all-time high Thursday.

As of Thursday, South Korea's total market capitalization according to FactSet was $4.6 trillion versus $4.1 trillion for Canada.

The milestones keep coming for the KOSPI index mostly owing to the strength in the semiconductor stocks SK Hynix (KR:000660) and Samsung Electronics (KR:005930) that have a combined weighting of 45% between them. The share prices of both have way more than doubled this year. The technology and artificial intelligence boom has propelled South Korea past the U.K. and Canada, whose markets have a much greater representation of traditional industries or old economy stocks.

For instance, the top four stocks in South Korea are all technology-focused whereas in Canada, two are banks, one is an energy play and only Shopify (CA:SHOP) counts as a tech stock. In most years, the 7% year-to-date advance in Canada's S&P/TSX benchmark would be considered a reasonable return, as would the 4.72% delivered by the FTSE 100 UK:UKX but they have been left trailing in the wake of the chipmakers that are struggling to keep pace with the relentless demands of the AI infrastructure buildout.

Despite the 77% rally in the Korean market this year, rising earnings expectations means that the market doesn't look expensive relative to the two markets it's just overtaken. The FTSE trades at 12.3 times the next twelve-month earnings, Canada around 15 times while the KOSPI, according to FactSet is just 8 times.

Just three stocks, Taiwan Semiconductor Manufacturing Company (TSM), Samsung Electronics and SK Hynix now account for a quarter of the MSCI emerging markets index EEM and have contributed enormously to the 20% rally it has generated in 2026, outpacing the S&P 500's 7% increase.

The Kospi closed Thursday's trading session at 7490, up 1.43%.

-Jules Rimmer

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05-07-26 0536ET