KOSPI Surges 1.5% on Stimulus Package, Nikkei Drops 0.2%

On Friday, the Japanese and South Korean stock markets closed with mixed results. The Nikkei 225 index ended the day down 0.2% at 38,403.23 points, weighed down by declines in electronic gaming and heavy industry stocks. In contrast, South Korea's KOSPI index rose 1.5% to close at 3,021.84 points, marking its fourth consecutive week of gains and surpassing the 3,000-point mark for the first time since January 2022.

The surge in the KOSPI index comes on the heels of President Yoon Suk-yeol's announcement of a stimulus package aimed at boosting the economy. The package includes measures to support small and medium-sized enterprises, which are expected to further bolster economic growth and investor confidence. The recent rally in the KOSPI index is a testament to the resilience of the South Korean economy, which has been buoyed by strong exports and a recovering domestic market.

The South Korean government proposed an additional 147 billion dollars in government spending to support domestic demand, as President Yoon Suk-yeol prioritizes economic recovery. This move is expected to alleviate growth concerns and reinforce the central bank's tightening stance on monetary policy. Analysts predict that the proposed second supplementary budget could prompt the Bank of Korea to raise its 2025 growth forecast from 0.8% to 1.0% during its August policy meeting. The fiscal stimulus measures are likely to ease growth worries and strengthen the central bank's hawkish stance on monetary policy.

The recent performance of the KOSPI index is a positive sign for the broader Asian market, which has also seen gains in recent weeks. The index's surge reflects the region's economic recovery and the growing optimism among investors. The South Korean won strengthened against the US dollar, and the three-year government bond yield also rose, indicating increased investor confidence in the economy.