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Korea Herald
3 days ago
- Business
- Korea Herald
Kospi could soar 50% in 2 years: JPMorgan
Bullish calls from local, global analysts cite policy alignment, surging liquidity, strong investor sentiment Once deemed wishful thinking, an ambitious target for 5,000 points for South Korea's benchmark Kospi is now firmly on the radar, with JPMorgan Chase & Co. forecasting the index could climb over 50 percent from current levels within just two years — if the government follows through on its pledge to accelerate corporate governance reforms. The bullish forecast was reported by Bloomberg on Saturday, citing a note from JPMorgan strategists. 'Korea remains a key overweight market in Asia and among emerging markets,' the strategists wrote, as cited by Bloomberg. 'The Kospi Index, which has gained 32 percent so far this year and is approaching a record high, could reach around 5,000.' JPMorgan upgraded Korean equities to 'overweight' from 'neutral' earlier this week, pointing to President Lee Jae Myung's efforts to narrow the "Korea Discount" — the persistent valuation gap with peers like Japan and Taiwan — and deliver what the bank called 'the next phase of governance reforms' during his five-year term. In pledging to lift the Kospi to 5,000 points, Lee has promised measures aimed at improving shareholder returns, raising transparency and strengthening corporate accountability. The target represents a 57 percent gain from Friday's close of 3,176. 'We continue to recommend adding on any volatility as long as the reform process remains on track,' the strategists said. 'Any volatility in global or regional equities over the summer on tariff concerns, growth slowdown, bond market volatility could thus quickly invite buying.' Investor enthusiasm over Lee's agenda is already rippling through markets. The Kospi has surged 18 percent from below 2,700 points ahead of his June 3 election, repeatedly testing near-four-year highs over the past month. With a six-month gain of 32 percent, it ranks among the world's top-performing indexes and leads Asia in 2025. On Friday, the country's benchmark index climbed to an intraday high of 3,216.7 points — breaking above the 3,200 level for the first time in 46 months, since September 2021. A day earlier, the rally had pushed its total market capitalization to a record 3,000 trillion won ($2.2 trillion). JPMorgan projected Kospi could surpass its all-time high this year, projecting a trading range of 3,200 to 3,500. The previous peak was an intraday high of 3,316 on June 25, 2021. Other market watchers echoed the upbeat view, pointing to policy momentum and a broader market rerating as key drivers of continued gains. 'The recent alignment of policy moves — a rate cut by the central bank, the supplementary budget and pro-market measures — has fueled Korean equities more strongly than ever,' said Byun Jun-ho, a strategist at IBK Securities. 'We expect this trend to continue into the second half.' Ample liquidity is also underpinning the rally. 'About 65 trillion won in retail investor deposits remains on hold, while foreign buying continues and inflows into domestic equity funds are rising sharply,' said Na Jung-hwan of NH Investment & Securities. 'We anticipate this liquidity will keep flowing into sectors and stocks benefiting from policy-driven momentum.' JPMorgan added that foreign investment — typically a key driver of the Kospi — has been relatively subdued in the first half this year compared to 2024, leaving room for further inflows. 'Given the interest we receive from global investors, we believe investors are looking for better entry points,' the strategists said. External risks, but bulls unshaken Some analysts flagged external risks, including tariff uncertainty and US inflation data. 'The upcoming US June Consumer Price Index is worth watching, as it could reflect the inflationary impact of Trump's tariff measures,' said Kang Jin-hyuk of Shinhan Securities. Na added, 'If inflation indicators come in high in the third quarter due to tariffs, it could delay the US Federal Reserve's rate-cut timeline — an emerging risk worth monitoring." Still, some see any pullback as a buying opportunity. 'Even as Kospi earnings forecasts are being revised downward, the index is outperforming global peers on the back of a broader market rerating, rather than earnings strength,' said Shin Seung-jin of Samsung Securities. 'If a tariff deal sparks rotation into previously lagging sectors, the Kospi could break past its 2021 peak and move to a new level.'
The Star
11-06-2025
- Business
- The Star
South Korea have to look beyond market cheers
The South Korean stock market soared on each of the first two trading days following President Lee Jae-myung's official inauguration after securing a decisive victory in the early election held on June 3, winning by a substantial margin over his opponents. The peaceful transition of power and the political clarity it brings have been met with visible enthusiasm. Undoubtedly, Lee and his party, together with the people of South Korea, have every reason to relish the celebratory honeymoon phase of their administration. The stock market's benchmark Kospi posted a remarkable combined gain of 4.2% over those two days to end at 2,812.05 points last Friday, representing the highest closing level in nearly a year since July 18 last year. During the same period, foreign investors made net purchases totalling 2.07 trillion won on the main board, marking the most net inflow from overseas investors in a year. This sharp uptick in buying activity reflected renewed confidence in the South Korean market under the new leadership. The rise in stock prices is widely interpreted as a reflection of relief across the investor community, stemming from the peaceful resolution of the months-long political impasse, triggered by the former president's controversial declaration of martial law last December. With stability now restored, there is cautious hope that Lee's administration will introduce pragmatic, market-friendly reforms. Contributing to the rally are also favourable external factors: a persistent weakening of the US dollar against major global currencies and the announcement that the United States and China intend to resume trade negotiations – developments that typically benefit emerging markets like South Korea. Historically, traditional markets served as informal forums where policymakers could gather sentiment from the people, as citizens exchanged views and insights while trading goods. In our current era, financial markets serve a parallel – yet far more complex and consequential – role. They function as barometers of public and investor sentiment, allowing market participants around the globe to continuously evaluate a nation's economic performance, policy direction and future outlook. From that perspective, the recent rally in the stock market, alongside the strengthening of the South Korean won, can be read as a strong initial endorsement of the promises and rhetoric offered by President Lee during the campaign. His campaign period, however, was notably brief, offering limited time for his team to flesh out fully detailed policy plans. Nonetheless, the messaging struck a chord, especially among investors and market observers eager for reform and modernisation. One of Lee's key campaign priorities is addressing the 'Korea Discount' – a persistent and well-documented phenomenon that refers to the comparatively low valuation of South Korean-listed companies relative to their international peers. It is largely attributed to weaknesses in corporate governance, low shareholder returns and systemic inefficiencies in South Korea's regulatory and economic framework. To address this issue, Lee has pledged to revise Article 382-3 of the Commercial Act. The proposed amendment would obligate directors of listed companies to act not just in good faith but specifically in the interest of both the company and all its shareholders. The current version of the act requires directors to act for the benefit of the company, but lacks explicit emphasis on shareholder interests. Lee has also vowed to introduce the cumulative voting system. Many view this as a powerful tool for enhancing minority shareholder rights, as it allows shareholders to pool votes to elect at least one representative to a board, in contrast to the traditional system of one vote per share per director. In addition, he supports other measures aimed at prompting companies to return a greater portion of earnings to shareholders and limiting the negative effects of corporate spinoffs that often disadvantage minority investors. While these governance-focused reforms are grabbing headlines, Lee has also promised fiscal stimulus on a massive scale. Though not explicitly intended to push stock prices higher, a major supplementary budget is expected to provide a strong economic stimulus to offset faltering domestic demand. This comes at a time when South Korea, an export-driven economy, is grappling with declining overseas sales due mainly to the United States government's imposition of steep tariffs on most of its trading partners. It is worth noting that the previous administration had already introduced a 13.8 trillion won supplementary budget back in May, aimed to assist those affected by weak consumer spending, fund recovery in wildfire-stricken regions and support the development of national artificial intelligence infrastructure. The new extra budget being considered under Lee's administration is reportedly about three times the size of the previous one, signalling a bold fiscal approach. Taken together, these initiatives have offered a strong psychological boost to the stock market. They enhance the growth outlook for shares in a wide range of South Korean companies, many of which have long underperformed relative to their counterparts in other advanced economies. The anticipation of pro-growth reforms, combined with short-term liquidity injections, has widened the upside potential for equities. Yet, such optimism must be tempered with realism. The market lift resulting from policy announcements and fiscal measures may not be sustainable unless underpinned by genuine improvements in economic fundamentals. Corporate earnings, gross domestic product growth and export competitiveness – particularly in light of evolving global trade dynamics and tariff uncertainties – remain the true drivers of long-term performance. Furthermore, the risk of unintended consequences looms large. Even the best-intentioned policy can yield adverse results. Business leaders and major corporations have already voiced concerns that overly aggressive changes to the Commercial Act might deter boards from making bold, strategic investments, out of fear of legal entanglements or shareholder activism. Similarly, the large supplementary budget, if not crafted with precision and expertise, risks missing its mark. Without broad consultation and careful planning, the spending could end up inefficiently allocated, raising government debt while failing to generate meaningful economic uplift. That would not only disappoint voters but also strain public finances further. — The Korea Herald/ANN Yoo Choon-sik worked for nearly 30 years at Reuters, including as the chief South Korea economics correspondent, and briefly worked as a business strategy consultant. The views expressed here are the writer's own.
Korea Herald
10-06-2025
- Business
- Korea Herald
Foreign inflow fuels Kospi rally
Foreign investors have poured nearly 4 trillion won ($3 billion) into the nation's benchmark Kospi so far this month, helping to drive a strong bullish run in the local stock market. Offshore investors net purchased shares worth 3.78 trillion won on the Kospi through Tuesday in June, continuing the 1.16 trillion won buying spree that began in May, according to data from the Korea Exchange, the nation's bourse operator. While they net bought shares worth 125 billion won on June 2, the amount surged on June 4, a day after the country's presidential election, to 1.05 trillion won, followed by a 980 billion won net purchase on June 5. On Monday and Tuesday, foreigners net bought shares amounting to 977 billion won and 634 billion won on the Kospi, respectively. The rally pushed the index to close daytime trading at 2871.85 on Tuesday, up 16.08 points or 0.56 percent, from the previous session. During intraday trading, the Kospi surged to as high as 2,885.67, nearing the 52-week high set at 2,896.43 on July 11 last year. The buying momentum has been partly fueled by growing expectations of political stability and reform following President Lee Jae-myung's election victory last week. 'With the inauguration of the Lee Jae-myung administration, expectations for revisions to the Commercial Act and efforts to address the 'Korea Discount' have stimulated foreign investor inflows,' said Lee Kyoung-min, an analyst at Daishin Securities. 'Protection of minority shareholder rights and improvements in corporate governance — longstanding demands from global investors — remain key themes. Foreign investment flows into the Korean stock market have clearly improved against this backdrop of policy-driven optimism and attractive valuations.' Backed by the rally, the Kospi has emerged as the best-performing major stock market worldwide over the past week, outpacing key global indices such as Hong Kong's Hang Seng, Denmark's OMX Copenhagen 25 and Japan's Nikkei 225, according to a list compiled by financial platform While not exhaustive, the list features selected stock indices of significant size and market value. Year-to-date, the Kospi has risen 19.36 percent, ranking as the eighth-best performer globally. It trails Poland's WIG 20 index, the top performer so far this year, which has surged 24.67 percent, placing the Kospi roughly five percentage points behind. Among the indices that function as comprehensive market indices that reflect the overall performance of their respective national stock markets, the Kospi ranked behind only those of Russia, Germany, Austria and Hong Kong. The others, such as the WIG 20, were composed of a limited number of selected large-cap companies.
Korea Herald
10-06-2025
- Business
- Korea Herald
Foreign investors fuel Kospi rally with $2.2b buying spree
Foreign investors have poured roughly 3 trillion won ($2.2 billion) into the nation's benchmark Kospi so far this month, helping to drive a strong bullish run in the local stock market. Offshore investors net purchased shares worth 3.14 trillion won on the Kospi through Monday, continuing the buying spree that began in May, according to data from the Korea Exchange, the nation's bourse operator. In May, foreign investors net bought 1.16 trillion won worth of Kospi shares, turning to buying for the first time since August 2024. The rally continued on Tuesday, with foreign investors purchasing an additional 390 billion won worth of shares on the Kospi as of 2 p.m., pushing the index to 2,867.62 — up 11.85 points, or 0.41 percent, from the previous session. The buying momentum has been partly fueled by growing expectations of political stability and reform following President Lee Jae-myung's election victory last week. 'With the inauguration of the Lee Jae-myung administration, expectations for revisions to the Commercial Act and efforts to address the 'Korea Discount' have stimulated foreign investor inflows,' said Lee Kyoung-min, an analyst at Daishin Securities. 'Protection of minority shareholder rights and improvements in corporate governance — longstanding demands from global investors — remain key themes. Foreign investment flows into the Korean stock market have clearly improved against this backdrop of policy-driven optimism and attractive valuations.' Amid the offshore buying spree, shares of market bellwether Samsung Electronics rose as high as 60,400 won during intraday trading on Monday, surpassing the 60,000 won threshold for the first time since March 28. The stock later pared its gains, trading at 59,250 won as of 2 p.m. Tuesday. The Kospi has emerged as the best-performing major stock market worldwide over the past week, outpacing key global indices such as Hong Kong's Hang Seng, Denmark's OMX Copenhagen 25, and Japan's Nikkei 225, according to a list of major world market indices compiled by financial platform While not exhaustive, the list features selected stock indices of significant size and market value. Year-to-date, the Kospi has risen 19.36 percent, ranking as the eighth-best performer globally. It trails Poland's WIG 20 index — the top performer so far this year — which has surged 24.67 percent, placing the Kospi roughly five percentage points behind.
![[Yoo Choon-sik] President Lee should look beyond market cheers](/_next/image?url=https%3A%2F%2Fwimg.heraldcorp.com%2Fnews%2Fcms%2F2025%2F06%2F08%2Fnews-p.v1.20250608.c3de5fa082994a0b9703c29f42d6141a_T1.jpg&w=3840&q=100)
Korea Herald
08-06-2025
- Business
- Korea Herald
[Yoo Choon-sik] President Lee should look beyond market cheers
The South Korean stock market soared on each of the first two trading days following President Lee Jae-myung's official inauguration after securing a decisive victory in the early election held on June 3, winning by a substantial margin over his opponents. The peaceful transition of power and the political clarity it brings have been met with visible enthusiasm. Undoubtedly, Lee and his party, together with the people of South Korea, have every reason to relish the celebratory honeymoon phase of their administration. The stock market's benchmark Kospi posted a remarkable combined gain of 4.2 percent over those two days to end at 2,812.05 points on Friday, representing the highest closing level in nearly a year since July 18 last year. During the same period, foreign investors made net purchases totaling 2.07 trillion won ($1.52 billion) on the main board, marking the most net inflow from overseas investors in a year. This sharp uptick in buying activity reflected renewed confidence in the Korean market under the new leadership. The rise in stock prices is widely interpreted as a reflection of relief across the investor community, stemming from the peaceful resolution of the monthslong political impasse, triggered by the former president's controversial declaration of martial law last December. With stability now restored, there is cautious hope that Lee's administration will introduce pragmatic, market-friendly reforms. Contributing to the rally are also favorable external factors: a persistent weakening of the US dollar against major global currencies and the announcement that the US and China intend to resume trade negotiations —developments that typically benefit emerging markets like South Korea. Historically, traditional markets served as informal forums where policymakers could gather sentiment from the people, as citizens exchanged views and insights while trading goods. In our current era, financial markets serve a parallel — yet far more complex and consequential — role. They function as barometers of public and investor sentiment, allowing market participants around the globe to continuously evaluate a nation's economic performance, policy direction and future outlook. From that perspective, the recent rally in the stock market, alongside the strengthening of the Korean won, can be read as a strong initial endorsement of the promises and rhetoric offered by President Lee during the campaign. His campaign period, however, was notably brief, offering limited time for his team to flesh out fully detailed policy plans. Nonetheless, the messaging struck a chord, especially among investors and market observers eager for reform and modernization. One of Lee's key campaign priorities is addressing the "Korea Discount" — a persistent and well-documented phenomenon that refers to the comparatively low valuation of Korean-listed companies relative to their international peers. It is largely attributed to weaknesses in corporate governance, low shareholder returns and systemic inefficiencies in South Korea's regulatory and economic framework. To address this issue, Lee has pledged to revise Article 382-3 of the Commercial Act. The proposed amendment would obligate directors of listed companies to act not just in good faith but specifically in the interest of both the company and all its shareholders. The current version of the act requires directors to act for the benefit of the company, but lacks explicit emphasis on shareholder interests. Lee has also vowed to introduce the cumulative voting system. Many view this as a powerful tool for enhancing minority shareholder rights, as it allows shareholders to pool votes to elect at least one representative to a board, in contrast to the traditional system of one vote per share per director. Deliberative policymaking In addition, he supports other measures aimed at prompting companies to return a greater portion of earnings to shareholders and limiting the negative effects of corporate spinoffs that often disadvantage minority investors. While these governance-focused reforms are grabbing headlines, Lee has also promised fiscal stimulus on a massive scale. Though not explicitly intended to push stock prices higher, a major supplementary budget is expected to provide a strong economic stimulus to offset faltering domestic demand. This comes at a time when South Korea, an export-driven economy, is grappling with declining overseas sales due mainly to the US government's imposition of steep tariffs on most of its trading partners. It is worth noting that the previous administration had already introduced a 13.8 trillion won supplementary budget back in May, aimed to assist those affected by weak consumer spending, fund recovery in wildfire-stricken regions and support the development of national artificial intelligence infrastructure. The new extra budget being considered under Lee's administration is reportedly about three times the size of the previous one, signaling a bold fiscal approach. Taken together, these initiatives have offered a strong psychological boost to the stock market. They enhance the growth outlook for shares in a wide range of South Korean companies, many of which have long underperformed relative to their counterparts in other advanced economies. The anticipation of pro-growth reforms, combined with short-term liquidity injections, has widened the upside potential for equities. Yet, such optimism must be tempered with realism. The market lift resulting from policy announcements and fiscal measures may not be sustainable unless underpinned by genuine improvements in economic fundamentals. Corporate earnings, gross domestic product growth and export competitiveness — particularly in light of evolving global trade dynamics and tariff uncertainties — remain the true drivers of long-term performance. Furthermore, the risk of unintended consequences looms large. Even the best-intentioned policy can yield adverse results. Business leaders and major corporations have already voiced concerns that overly aggressive changes to the Commercial Act might deter boards from making bold, strategic investments, out of fear of legal entanglements or shareholder activism. Similarly, the large supplementary budget, if not crafted with precision and expertise, risks missing its mark. Without broad consultation and careful planning, the spending could end up inefficiently allocated, raising government debt while failing to generate meaningful economic uplift. That would not only disappoint voters but also strain public finances further. These concerns are especially pertinent in today's political landscape, where the Democratic Party of Korea holds a commanding majority across both the executive and legislative branches. This political dominance could enable the administration to push forward its agenda swiftly, but also tempt it to bypass the kind of open, deliberative policymaking that democracy requires. President Lee must remain aware that while voters handed him a clear mandate, they did not grant him unchecked authority. The people expect reform, yes — but they also expect balance, consultation and accountability. As the proposed revision of the Commercial Act implicitly acknowledges, those in power have a duty to act not just in their party's interest, but in the collective interest of the entire nation. Yoo Choon-sik worked for nearly 30 years at Reuters, including as the chief Korea economics correspondent, and briefly worked as a business strategy consultant. The views expressed here are the writer's own. — Ed.
