KOSPI surpasses 4,000, marks historic market milestone

On Oct. 27, the KOSPI surpassed 4,000 for the first time, setting a new milestone for South Korea’s capital market. The index closed at 4,042.83, up 2.57% from the previous session. The index first surpassed 3,000 on June 20 and crossed 3,500 on Oct. 2, reaching 4,000 in less than a month. Its gains far outpaced markets in the United States, Europe, and Japan, raising hopes that the Korean market is shifting from a long-standing “Korea discount” to a “Korea premium.”

The market’s surge reflects several factors, including an AI-driven semiconductor supercycle, expectations of U.S. interest rate cuts, and anticipated government stimulus measures. The semiconductor sector, a key driver of the Korean economy, played a particularly significant role. On Oct. 27, Samsung Electronics shares topped 100,000 won for the first time, and SK hynix stabilized above 500,000 won, with the two largest companies by market value jointly leading the rally.

External factors also supported the market. Expectations of easing U.S.-China trade tensions and record highs in U.S. stocks boosted investor sentiment. Foreign investors, who had largely avoided the domestic market, returned, netting more than 17 trillion won in the second half of the year. Government measures to stimulate the market while curbing real estate demand funneled abundant liquidity into equities.

Despite the rally, risks persist. Gains are concentrated in semiconductors and a few large-cap stocks. Samsung Electronics and SK hynix account for roughly one-third of KOSPI trading volume. While the index rose from 3,000 to 4,000, many individual stocks fell, widening the gap between companies. The outcome of South Korea-U.S. tariff negotiations, crucial for exports, remains uncertain. The won’s continued weakness, even in a soft-dollar environment, raises concerns about sustained foreign investment inflows.

Recent gains appear driven more by liquidity and investor sentiment than by structural growth. Sustained market improvement will require a recovery in corporate earnings and broader economic expansion. The government should avoid treating short-term gains as a measure of economic performance and instead focus on structural reforms to strengthen fundamentals.