As Samsung Electronics and SK hynix soar past Korea’s annual GDP in combined value, the gains are concentrated among a small minority while market volatility raises broader risks for the general public.
The Kospi's closing price and share prices of Samsung Electronics and SK hynix are displayed on an electronic board at the Hana Bank trading room in Jung District, central Seoul, on June 25, after the benchmark index closed up more than 5 percent.NEWS1
Cho Hyun-suk
The author is the economy news editor of the JoongAng Ilbo.
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An anonymous social media post by someone claiming to be a private academy instructor went viral last week. The writer said he had invested the 500 million won ($330,000) he earned over four years into Samsung Electronics when its shares traded at 54,000 won. The investment, he claimed, has since grown to 3 billion won. Posting a screenshot of his brokerage account as proof, he announced his retirement after 20 years of teaching.
In an age when AI can produce Hollywood-quality films in minutes, altering the figures in a brokerage account is hardly difficult. Whether the post is genuine is beside the point. The astonishing numbers being recorded by Samsung Electronics and SK hynix every day have already set retail investors' imaginations on fire.
On Friday, Samsung Electronics rose 8.22 percent to 309,500 won while SK hynix climbed 10.88 percent to 2.425 million won. Together, the two companies were worth 3.54 quadrillion won ($2.31 trillion, based on Friday's exchange rate of 1,530 won to the dollar), comfortably exceeding Korea's total nominal GDP of 2.68 quadrillion won last year. Put differently, even if the country saved every won it produced without spending any of it, it would take nearly a year and a half to accumulate that much wealth. That enormous value is concentrated in just two semiconductor companies.
Has the entire nation become richer? The numbers suggest otherwise.
According to the Korea Securities Depository, Samsung Electronics had 4.18 million individual shareholders at the end of last year, enough to justify its reputation as the nation's "people's stock." Yet those investors owned only 13 percent of the company's outstanding shares. On average, each held 183 shares, worth about 56.6 million won at current prices if they never sold.
Someone who patiently held Samsung Electronics from the days when it traded around 50,000 won would have earned roughly 40 million won on average. That is meaningful, but it is far from the life-changing fortune suggested by countless online success stories. The reality is probably less impressive still. Korea's stock turnover ratio reached a record 313 percent in June, according to Hana Securities, meaning relatively few investors are likely to have held their positions throughout the rally. With average household stock investments estimated at only 10 million to 20 million won, the semiconductor windfall remains largely someone else's story.
Benjamin Graham, mentor to Warren Buffett, pioneered value investing by urging investors to buy undervalued companies and sell them when prices reflect their worth. The famous rule often attributed to Buffett — "Never lose money. Never forget the first rule." — also originated with Graham.
In "The Intelligent Investor" (1949), published as the United States was recovering from World War II, Graham described the stock market as "Mr. Market," an emotional business partner who appears every day offering to buy or sell shares. Sometimes his prices are sensible. At other times, optimism or fear drives them far from reality.
Today's Korean market resembles that unpredictable partner. It has become routine for the country's two largest semiconductor companies to rise or fall by around 10 percent in a single session. Sidecars that temporarily curb program trading are triggered repeatedly in both directions, while circuit breakers that halt trading altogether have become increasingly common. Borrowed from electrical engineering, the term refers to a device that cuts power when a circuit overheats. It serves the same purpose in financial markets overwhelmed by speculation.
A Kospithat has more than doubled within a year and now fluctuates between 8,000 and 9,000 is not simply a reason to celebrate. What threatens a ship is not the depth of the sea but the height of the waves. Nor should investors take comfort in the fact that similar swings are occurring in the United States and Japan. If anything, that makes caution all the more necessary.
There is no need to invoke the phrase "privatizing profits while socializing losses." Statistics already demonstrate clearly that only a minority truly benefits during a market boom. When markets collapse, however, businesses and households alike pay the price, as Korea learned during the 1997 Asian financial crisis and the 2008 global financial crisis. That is why the increasingly erratic behavior of "Mr. Korea Market" deserves concern rather than celebration.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
