Asian markets surge 2.8% as retail frenzy drives AI stocks to records

Taxi drivers and schoolchildren are joining South Korea's retail investing boom as AI-related stocks from Seoul to Tokyo hit all-time highs.

South Korea's Kospi jumped 2.8% to cross 9,000 for the first time as retail investors piled into AI-related stocks, extending a record-setting run across Asian markets.

"The AI trade has become a broad-based retail phenomenon across Asia, drawing in participants who had never invested before," the Wall Street Journal reported, citing market participants in Seoul, Taipei and Tokyo.

Samsung Electronics and SK Hynix climbed to all-time highs, leading the Kospi's advance. Japan's Nikkei 225 added 0.6% after hitting a record high in the prior session, while the Topix was flat. Australia's S&P/ASX 200 fell 0.74%, bucking the regional trend. Markets in China, Hong Kong and Taiwan were closed for a holiday.

The retail frenzy raises the stakes for Asian policymakers, who must weigh the economic benefits of rising household equity wealth against the risk of a sharp correction if AI sentiment turns. The Kospi's surge past 9,000 has drawn comparisons to the dot-com era, with some analysts warning that valuations in the most frothy AI names may be stretched.

Kospi Crosses 9,000 as Samsung, SK Hynix Hit Records

The rally in Asian tech stocks tracked Wall Street's advance, where the S&P 500 added 1.08% to close at 7,500.58 and the Nasdaq Composite climbed 1.91% to 26,517.93. The Dow Jones Industrial Average rose 0.14% to 51,564.70. The Federal Reserve's indication of a possible rate hike this year initially sparked a sell-off before equities recovered.

South Korea's retail trading volumes have surged as individual investors borrow to buy AI-related stocks, according to the WSJ report. The phenomenon has extended beyond typical day traders to include taxi drivers discussing stock tips with passengers and parents opening brokerage accounts for their children.

Retail Mania Spreads Beyond Typical Investors

Japan's market has seen similar dynamics, with the Nikkei 225's record run drawing in retail participation. The benchmark index has been lifted by semiconductor-related names and AI infrastructure plays, mirroring the global enthusiasm for technology stocks tied to artificial intelligence. The Kospi's small-cap Kosdaq index slid 0.39%, suggesting the rally remains concentrated in large-cap AI names rather than broad-based.

The participation of non-professional investors raises questions about market stability. South Korean authorities have previously warned about the risks of leveraged retail trading during periods of heightened volatility. Any reversal in AI sentiment could trigger forced selling, amplifying downside moves in the most crowded trades.

This article is for informational purposes only and does not constitute investment advice.