Historical Rise in the South Korean Stock Exchange in 2025: The Future of Kospi

The Impressive Performance of the South Korean Stock Exchange

2025 was a turning point for the South Korean stock exchange. The Kospi index experienced a rapid rise from 2,400 at the beginning of the year, reaching 4,000 points with a remarkable 61% increase. This performance is recorded as the most remarkable stock market rally in the last 25 years.

Triggers of the Rally

The significant rise in the stock market was largely influenced by President Lee Jae Myung's commitment to elevate the Kospi to 5,000 points. This political statement boosted investor confidence and created widespread market activity.

The Role of Artificial Intelligence and Corporate Reforms

Moreover, advancements in artificial intelligence and comprehensive corporate reforms have played a critical role in the rise of the Kospi. The stock gains of tech giants like Samsung Electronics and SK Hynix have significantly contributed to the market's upward trend.

Volatility and Investor Behavior

However, this rapid increase has also raised some concerns. High valuations in AI stocks have created increasing volatility in the index. Recently, the index experienced a 4% decline due to a global sell-off. The record-level borrowing by domestic individual investors, combined with declining foreign fund flows, highlighted the fragility of the upward trend.

Reforms for Long-term Sustainability

In terms of long-term sustainability, structural reforms appear to be critical. Changes in the Trade Law, reduction of dividend taxes, and other technical regulations are among the important topics in this process.

Analyst Opinions and Future Expectations

Analysts indicate that South Korean stocks still offer attractive values. For example, Federated Hermes portfolio manager Jonathan Pines stated, “If the low valuations in the market disappear, Kospi could grow two to three times.” JPMorgan identifies the critical level at 5,000 points, while Citigroup expects the index to reach 5,500 points by the end of 2026.