KOSPI surpasses 3,400 for 1st time on gov’t tax policy tweak, global tech boom

Korea’s main bourse KOSPI surpassed an all-time high of 3,400 Monday, continuing its historic rally for the fourth consecutive session.

Analysts said the milestone underscores growing investor confidence, powered by a global tech stock boom. Also at play was the government’s scrapping of a plan to tighten rules on major shareholders subject to capital gains tax after fierce backlash from retail investors.

The KOSPI, which surged to an intraday high of 3,420.23 points, ended at 3,407.31 points, up 0.35 percent from the previous session. The main stock index has now risen for 10 consecutive trading days, its longest such streak in recent years.

Behind the bullish run was last week’s U.S. tech rally.

Despite mixed U.S. consumer sentiment data, investors continued betting on a September rate cut by the U.S. Federal Reserve.

This sent the shares of Tesla soaring more than 7 percent on optimism over artificial intelligence (AI) and robotics.

In addition, Seoul stocks gained further upward momentum, propelled by Economy and Finance Minister Koo Yun-cheol’s comment earlier in the day that the government will maintain the threshold for capital gains tax on major shareholders at 5 billion won.

The announcement scraps the ministry’s earlier plan to lower it to 1 billion won, a tighter measure that sought to subject more investors to the heavy tax.

The decision reflected retail investors’ calls for revitalization of the country’s capital markets and the ruling Democratic Party of Korea (DPK) seeking to maintain the status quo, Koo said.

“The tax reform plan was announced in July. We have since discussed extensively the need to balance between tax revenue increases for a sustainable fiscal profile and capital market advancement,” he said during a meeting of the government and the ruling party at the National Assembly.

Samsung Electronics hit a 52-week high of 77,600 won ($55) and SK hynix a record high of 341,500 won.

Foreign investors were net buyers of 178.4 billion won worth of stocks, while institutional and retail investors remained net sellers.

Daishin Securities analyst Eric Lee said upward momentum remains strong, while a further rally beyond 3,400 points is not likely without short-term volatility.

“The strong short-term rally is significant. However, it’s time to remain cautious and prepare for strategies to increase holdings of shares that are likely to fall in price given the rapid price jump over the past few weeks,” Lee said.