KOSPI Surges 1.9% as South Korea Nears Bull Market on Policy Optimism

The South Korean stock market is on the brink of entering a bull market, with the Korea Composite Stock Price Index (KOSPI) surging 1.9% during Thursday's trading session. This surge marks the index's first breach of the 2700-point threshold since August of the previous year, bringing it within approximately 1.3% of achieving a technical bull market status. The rally has been driven by a combination of factors, including optimistic expectations surrounding the economic policies of the incoming government and a series of favorable developments.

The export-driven economy of South Korea has received a double boost. On one hand, NVIDIA's optimistic outlook on the artificial intelligence industry has bolstered confidence in the semiconductor supply chain. On the other hand, a ruling by the U.S. International Trade Court that partially invalidated the tariff measures imposed by the Trump administration has provided a respite for South Korea's key industries. These positive signals have significantly improved market sentiment regarding South Korea's export prospects.

Policy expectations have emerged as the primary catalyst for the market's upward trajectory. Following the interest rate cut by the Bank of Korea on Thursday, Governor Lee Chang-yong indicated that there is room for further easing, aligning with market expectations that the new government will implement proactive fiscal policies post-election. Presidential candidate Lee Jae-myung's investment portfolio, which includes ETFs tracking the KOSPI and KOSDAQ indices, has further fueled market enthusiasm. His "Eliminate the Korea Discount" plan, which aims to push the benchmark index to 5000 points through reforms, has ignited investor interest.

The flow of funds into the market reflects growing confidence. During Thursday's trading session, the securities sector led the gains, indicating that investors are positioning themselves to capitalize on policy benefits. Data from KB Securities shows that net foreign inflows for the month have doubled compared to the previous month, with institutional investors showing heightened interest in reform-related themes.

This policy-driven rally is fundamentally a vote of confidence in South Korea's economic transformation. As the presidential election approaches on June 3, the combination of fiscal expansion and monetary easing will be crucial in determining whether the South Korean stock market can break free from the "Korea Discount" curse. The market's performance will hinge on whether these policies can be effectively implemented and deliver the anticipated benefits. The upcoming election and the subsequent policy changes will be closely watched by investors, as they hold the key to unlocking the full potential of the South Korean stock market.