Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Can KOSPI reach 5,000-point milestone as new president pledges?
President Lee Jae-myung, front center, poses with heads of research at major securities firms during a meeting in Seoul's financial district of Yeouido, April 21, when he was a primary candidate of the Democratic Party of Korea (DPK). Yonhap
By Yi Whan-woo
Lee urged to tackle deflationary risks, support key industries
The Korean stock market is projected to trend upward under President Lee Jae-myung’s market reform initiatives, but whether the benchmark KOSPI can top the 5,000-point milestone will be an entirely different story, according to economists and analysts.
The newly elected president pledged to achieve this unprecedented milestone during his term.
The KOSPI will need to nearly double in size after mainly staying around 2,600 points since May. Also, Korea’s economy needs to nearly double in size, considering the closely connected relationship between stock market growth and the national economy, according to economic experts.
But given that Korea’s GDP growth has been slowing down for years, it may be “overly optimistic that the country’s economy becomes large enough for the KOSPI to reach the 5,000-point mark,” said Shin Se-don, professor emeritus of economics at Sookmyung Women's University.
“It’s hard to see that happening during Lee's single five-year presidency, although the KOSPI is gaining ground,” Shin indicated.
Shin pointed out that the KOSPI went up 12.43 percent from January to May, fueling optimism that it may soon surpass the 3,000-point mark for the first time since Dec. 28, 2021.
Also in 2021, the KOSPI reached its all-time high of 3,302.84 points on June 25.
In contrary to optimism on the stock market, Shin reckoned that a slow pace of economic growth below 2 percent “is becoming the new normal” for Korea.
The country’s economy shrank 0.2 percent in the first quarter of 2025, marking the first contraction in three quarters. Accordingly, the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) both forecast Korea’s 2025 GDP growth at 1 percent, while the Bank of Korea (BOK) put it at 0.8 percent.
Under the circumstances, Park Hee-chan, head of research at Mirae Asset Securities, speculated that a possible deflation could further hinder Lee’s wish to take the KOSPI higher than the 5,000-point mark.
A trading board at Hana Bank headquarters in Seoul shows the benchmark KOSPI closing at 3,020.24 points, Dec. 28, 2021, up 20.69 points or 0.69 percent from the previous session. Yonhap
Deflation refers to a decline in prices of goods and services, stemming from a slowdown in economic growth. Corporate profit margins tend to decline with deflation, prompting investors to turn to safe haven assets rather than stocks.
“We should therefore not let the economy fall into deflation, while making sure that a KOSPI above 5,000 points is something approached from the perspective of the overall national economy,” Park said.
Jung Eui-jung, head of the Korean Stockholders' Alliance, referred to past governments as he argued that the KOSPI more than doubling and reaching the 5,000-point milestone “requires far longer than investors may expect.”
He noted the only time the KOSPI rose by more than 100 percent under the same government was during President Roh Moo-hyun’s term, from 2003 to 2008.
Roh’s successor, Lee Myung-bak, pledged to boost the KOSPI above 5,000 points, but did not succeed.
An analyst pointed out on condition of anonymity that Lee Jae-myung’s term mostly overlaps with Donald Trump's second presidency and the global economic uncertainties heightened by Trump’s “America First” policy.
“We already saw the Seoul stock market taking a hit during the first couple of months of Trump’s second presidency, starting in January,” he said. “And no one can rule out the possibility of it happening again during Lee’s term.”
The National Assembly passes a bill revising the Commercial Act aimed at empowering minority shareholders in Yeouido, Seoul, March 13. Yonhap
Counter-strategy for 'Korea discount'
Some experts said realizing the new president's plan to counter the “Korea discount” may make the 5,000-point milestone possible during his term.
The "Korea discount" refers to the chronic undervaluation of Korean stocks compared to global peers due to excessive regulations, lax corporate governance, weak shareholder returns and other negative factors for investment.
“Past presidents, despite their efforts, fell short of successfully tackling the 'Korea discount' but Lee may be able to come up with a better outcome with his decisive push and determination,” said Yoo Ho-lim, a professor of taxation at Kangnam University.
He suggested that a revised Commercial Act and other legislative efforts aimed at empowering minority shareholders are expected to gain further ground as the ruling Democratic Party of Korea (DPK) has a majority in the National Assembly.
“The political support for stock market reforms can push the KOSPI to grow exponentially, possibly to a level beyond 5,000 points,” Yoo said.
Jung Ho-chul of Citizens' Coalition for Economic Justice (CCEJ), a civic activist group, identified corporate governance as the biggest obstacle facing Korea’s undervalued stocks.
“The related issues range from opaque governance structure, low dividend payouts and split listings, which favor corporate owners but not small, individual shareholders,” he said.
He called for more independent boards, arguing this will “draw foreign investors’ attention toward the domestic stock market with optimism.”
“The likelihood of achieving the 5,000-point milestone may increase if institutional reforms are accompanied by economic policies, which, in turn, could enhance long-term growth potential,” Jung added.
Kim Byung-yeon, an analyst at NH Investment & Securities, said the government’s support for recovery in key industries, including semiconductor, secondary batteries, cars and steel, will be crucial as the corresponding companies compose a large share of the KOSPI’s market capitalization.
For instance, chipmaker Samsung Electronics and its cross-town rival SK hynix account for about one-fourth of the index’s entire market cap, according to Kim.
“These export-driven industries are vulnerable to external shocks, especially at a time when U.S. tariff policies are taking a heavy toll and Korea’s exports to China are slowing,” he said. “Timely support for these companies to enhance global competence can boost their stock prices, as well as the entire KOSPI’s value.”