- Kospi Index continued its strong rally, reaching its all-time high.
- The rally has been driven by the ongoing AI boom.
- This surge has contributed to the ongoing crypto market weakness.
South Korea’s Kospi Index jumped to a record high on Friday, continuing one of the most spectacular bull runs in the stock market. It jumped to 9,287 points today, June 19, up by 119% since the year started. It has soared by 210% over the last 12 months, prompting crypto investors to defect to the booming stock market.
Kospi Index Rally Gains Steam Amid AI Boom
The Kospi Index, which tracks the biggest South Korean companies, has been in a spectacular rally, helped by the ongoing AI boom. This surge has been made possible by leading companies such as Samsung and SK Hynix, which have entered the exclusive trillion-dollar club.
Samsung Electronics has done well due to strong demand for its chips, which are used by companies such as Apple, Google, and AMD. Similarly, SK Hynix has soared due to its strong presence in the DRAM market, with its products used by firms such as Amazon, Nvidia, and Lenovo.
Their performance has coincided with that of other US companies, including SanDisk, Seagate, Micron, and Western Digital. Kospi’s surge has also happened at a time when other top global indices, such as the Nasdaq 100, S&P 500, and the Nikkei 225, have all soared to all-time highs.
READ MORE: Cardano Price Prediction: Here’s Why ADA Has Collapsed
Driving the surge is also the ongoing retreat in crude oil prices after President Trump decided to ink a deal with the Iranians to end the war. He signed his Memorandum of Understanding (MoU) this week, pushing oil prices much lower, with Brent and the WTI falling below $80.
This retreat, together with the reopening of the Strait of Hormuz, is bullish for South Korea, as it imports most of its oil from the Middle East. As such, the country will find it easy to refill its strategic oil reserves. At the same time, it will lead to a lower inflation rate in the country, enabling the central bank to maintain low interest rates.
South Korean Crypto Traders Turn to Stocks
The Kospi Index’s surge has partially contributed to the crypto market crash, since South Korea is one of the most active countries in the industry.
Data show that the daily trading volume on key South Korean exchanges has continued to fall this month. Upbit, the country’s top exchange, handled $818 million in trading volume over the last 24 hours. At its peak, it handled over $10 billion a day.
Some crypto traders have largely capitulated after the weak performance of the last few years. Also, the large liquidation event on October 10 last year has discouraged crypto investors from participating in the industry.
The same trend is happening in the United States, where spot Bitcoin and Ethereum ETFs have shed assets, while those tracking the stock market have added over $1 trillion in assets.
Therefore, the most likely scenario is where the crypto industry rebounds when the AI boom starts to fade. Such a move will lead to a rotation from the stock market to assets that have underperformed during the stock market bull run.
READ MORE: Pi Network Price Has Stalled: June 28 Will be Crucial
