South Korea has overtaken India to become the world’s sixth-largest stock market by capitalization, reflecting the growing impact of the global artificial intelligence (AI) boom on investment flows and market leadership. The development was highlighted in a recent report by Jefferies, which examined the changing dynamics of global capital markets.
According to the brokerage, South Korea’s stock market capitalization has risen to approximately $4.92 trillion, narrowly surpassing India’s $4.82 trillion market value. Taiwan remains ahead at around $5.26 trillion. The rapid growth of South Korea’s market has been largely fueled by strong investor enthusiasm for AI-related technology companies and semiconductor manufacturers.
Jefferies noted that artificial intelligence continues to be the dominant investment theme across global markets. However, the firm also warned that investors may be overlooking important risks, including geopolitical tensions and increasing signs of speculative behavior within certain segments of the technology sector.
One of the key developments highlighted in the report is the expected wave of mega-sized AI-related public offerings in the United States. Companies such as SpaceX, OpenAI, and Anthropic are widely viewed as potential blockbuster IPO candidates capable of attracting enormous investor interest and capital.
Among them, SpaceX is expected to be one of the largest listings in history, with estimates suggesting a potential valuation of nearly $1.77 trillion and fundraising of around $75 billion. Jefferies believes that recent changes in U.S. index inclusion rules could allow such companies to enter major stock indices more quickly, forcing passive investment funds to purchase their shares and creating significant additional demand.
The brokerage cautioned that these mega IPOs could absorb substantial market liquidity, potentially reducing investment flows into existing technology and AI-related stocks that have benefited from strong investor demand in recent years.
The report also pointed to increasing signs of speculative activity in Asian technology markets. In South Korea, margin debt has reportedly surged by about 140% since the start of 2025, while investors have aggressively poured money into leveraged semiconductor-focused exchange-traded funds linked to companies such as Samsung Electronics and SK Hynix.
One leveraged SK Hynix ETF listed in Hong Kong has reportedly grown into the world’s largest single-stock leveraged ETF, with assets exceeding $10 billion, highlighting the intense investor appetite for semiconductor-related investments.
Meanwhile, China is rapidly strengthening its semiconductor industry. Jefferies highlighted the upcoming IPO plans of memory chip manufacturers Yangtze Memory Technologies (YMTC) and ChangXin Memory Technologies (CXMT), which are expected to raise significant capital for expansion. These companies aim to compete more aggressively with global industry leaders such as Samsung Electronics, SK Hynix, and Micron Technology.
The report further noted that China’s integrated circuit exports nearly doubled year-on-year in April, signaling the country’s growing capabilities and ambitions in the global semiconductor sector.
Despite the excitement surrounding AI and technology stocks, Jefferies warned investors not to ignore geopolitical developments. Ongoing tensions involving Iran, as well as the continuing Russia-Ukraine conflict, remain potential risks to global markets and inflation.
As a result, the brokerage continues to favor investments in the energy sector as a hedge against geopolitical uncertainty, arguing that disruptions in major energy-producing regions could significantly impact global commodity prices.
While artificial intelligence remains the primary growth story driving global markets, Jefferies believes the battle for investment capital is entering a new phase. Mega IPOs, intensifying semiconductor competition, geopolitical risks, and shifting market leadership are likely to play an increasingly important role in shaping investor returns in the years ahead.
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