This Country's Stock Market Was the World's Top Performer in 2025

Key Points

• U.S. stocks have dominated global returns over the past 20 years, far outpacing developed and emerging markets overall.
• That trend flipped in 2025, when international benchmarks delivered much stronger gains than the S&P 500.
• South Korea led the global leaderboard, powered by AI-linked memory chip winners and reform-driven momentum heading into 2026.

Over long periods of time, U.S. stocks have established themselves as among the best performers in global equity markets. In the 20 years ended Jan. 26, 2026, the S&P 500 Index has delivered a total return exceeding 650%.

The iShares MSCI EAFE ETF NYSEARCA: EFA and the iShares MSCI Emerging Markets ETF NYSEARCA: EEM track the performance of international stock market indexes. EFA focuses on stocks in developed economies, while EEM focuses on emerging or developing market economies. Over the same period, these ETFs have delivered returns of less than 200%.

However, the United States got the short end of the stick in 2025. The S&P 500’s 17.7% total return vastly underperformed EFA and EEM, which generated gains of 31.5% and 34%, respectively. Among international stock markets, one country beat out all others. This U.S. ally is a key player in the artificial intelligence (AI) ecosystem and has seen massive gains in its top companies.

Samsung and SK Hynix Lead South Korea’s Rally

In 2025, South Korea took the cake as the best-performing stock market in the world. The iShares MSCI South Korea ETF NYSEARCA: EWY tracks the performance of more than 80 South Korean stocks. Overall, the fund delivered a total return of 95% for the year. JPMorgan notes that in U.S. dollar terms, the South Korean stock market gained almost 101%.

South Korea’s stock market is highly concentrated, a dynamic that worked very well in its favor during 2025. Samsung Electronics OTCMKTS: SSNLF and SK Hynix account for 26.5% and 18.4% of EWY’s weighting, respectively, comprising almost 45% of the total fund. South Korean listed shares of these companies delivered massive gains in 2025. Samsung’s total return was approximately 130%. For SK Hynix, the figure came in at a whopping 278%. The reason for their rise? Samsung and SK Hynix are two of the big three players in the memory chip market, along with U.S. giant Micron Technology NASDAQ: MU. Micron’s return was 240% during the year.

With AI systems demanding advanced memory chips, and those chips being in short supply, prices of these components soared in 2025. Analysts forecast further price increases during 2026. This dynamic has led investors to gobble up shares of the three stocks, as price increases are generating huge positive effects on revenue, margins and profits.

Value Up Reforms Look to Mitigate “Korean Discount”

More generally, reforms to South Korea’s corporate governance policies have influenced the rally. The country’s stock market has long-suffered from what became known as the “Korean Discount”. This is a phenomenon where Korean stocks have often traded at lower valuation multiples versus peers in other geographies. The poor protection of minority shareholders' interests by South Korean companies has driven this.

Chaebols are large family-controlled conglomerates that dominate much of the South Korean economy. Through various means, they limit the voice of other shareholders and make assessing value difficult. They serve to protect the wealth and control of their respective families and are not primarily motivated by creating shareholder value.

However, South Korean politicians are taking steps to address these issues through the “Value Up” program. Reforms in this program include extending the fiduciary duty of independent directors from the “Company” to the “Company and Shareholders." This allows minority owners to challenge company decisions that are not in their best interest.

Memory Stocks and Value Up Could Lead to More Upside in 2026

Looking ahead, many continue to be bullish on the South Korean stock market. Analysts at Goldman Sachs project that the Korean stock market will deliver a 23% return in 2026, in dollar figures. Samsung and SK Hynix hold around 80% of the world’s market share in high-bandwidth memory (HBM) chips. This helps make these firms among the biggest beneficiaries of a continued shortage. Still, these stocks have already soared, raising questions about how much further their rallies can continue.

Analysts at Morgan Stanley also believe that South Korea is early on in its Value Up journey. It sees tax reform, treasury share cancellations, and government follow-through as key steps South Korea can take to build investor confidence. This suggests that South Korean stocks could see further Value Up-driven gains should deeper reforms take place. Still, Morgan Stanley calls South Korea’s tax policy “notoriously difficult to predict."

EWY is the simplest way to invest in the South Korean stock market. However, currency fluctuations between the U.S. dollar and the South Korean won will affect performance.