The South Korean stock market approaches a bull market as rising presidential election expectations boost KOSPI to a nine-month high
The Korea Composite Stock Price Index (KOSPI) rose 1.9% on Thursday, breaking through the 2,700-point mark for the first time, just 1.3% away from a technical bull market. The market's optimistic expectations for the new government's economic policies and multiple favorable factors drove the stock market up. NVIDIA's optimistic outlook for the AI industry and the U.S. International Trade Court's ruling improved export prospects. The Bank of Korea's governor hinted at possible further interest rate cuts in the future, and candidate Lee Jae-myung's commitment to reforms also sparked market enthusiasm. Foreign capital inflows have significantly increased, with investors positioning themselves ahead of policy dividends
According to the Zhitong Finance APP, the Korea Composite Stock Price Index (KOSPI) surged 1.9% during trading on Thursday, breaking through the 2,700-point mark for the first time since last August, with only about a 1.3% increase needed to reach a technical bull market. Since the beginning of this month, the Korean stock market has outperformed Asian markets, mainly benefiting from optimistic expectations regarding the new government's economic policies and the resonance of multiple positive factors.
The export-driven economy is experiencing dual benefits: on one hand, NVIDIA's (NVDA.US) optimistic outlook for the artificial intelligence industry has boosted confidence in the semiconductor supply chain; on the other hand, the U.S. International Trade Court ruled that the Trump administration's tariffs on goods from multiple countries were partially illegal, providing a breather for Korea's pillar industries. The combination of these two positive signals has significantly improved market expectations for Korea's export situation.
Policy expectations have become the biggest driving force. After the Bank of Korea's Governor Lee Chang-yong lowered interest rates on Thursday, he sent a clear signal, stating that "there is room for further easing in the future," which resonates with market expectations that the new government will implement proactive fiscal policies after the election. Current presidential candidate Lee Jae-myung's disclosed personal investment portfolio includes ETF products tracking the KOSPI and KOSDAQ indices, and his proposed "elimination of the Korean discount" plan—committing to reform and raising the benchmark index to 5,000 points—has further ignited market enthusiasm.
The flow of funds confirms market confidence. In Thursday's trading, the brokerage sector became the leading performer, reflecting that investors are positioning themselves in advance for policy dividends. Data from KB Securities shows that foreign net inflows this month have reached twice that of last month, and institutional investors' attention to reform themes has risen to a year-to-date high.
This market trend driven by policy expectations is essentially a vote of confidence in Korea's economic transformation. As the June 3rd election approaches, whether the combination of fiscal expansion and monetary easing can be realized will be a key variable in determining whether the Korean stock market can break the "Korean discount" curse
