Korean stock market finishes 2025 on high note

An electronic trading board at Hana Bank headquarters in central Seoul shows the benchmark KOSPI closing at 4,214.17 points on Tuesday, the last trading day of 2025. Yonhap

The benchmark KOSPI made a stunning turnaround to close 2025 as the highest-gaining index among major economies, surpassing the 3,000- and 4,000-point milestones after posting its largest increase in 26 years.

The index ended the year at 4,214.17 points on Tuesday, down 0.15 percent from the previous session, securing a 75.62 percent gain from the end of 2024. In 2024, it fell 9.63 percent to close at 2,399.49 points.

The 75.62 percent gain was the highest among leading global markets, with little chance of being outpaced.

As of Monday, Israel’s TA-125 had gained 52.49 percent, while Hong Kong’s Hang Seng Index had risen by 27.79 percent. Japan’s Nikkei 225 had grown by 26.65 percent, and the Nasdaq and S&P 500 from the United States had climbed 22.18 percent and 14.49 percent, respectively.

In its own history, KOSPI’s 2025 increase ranks as the third-largest, following the 93 percent surge in 1987 — driven by the so-called “three lows” in oil prices, interest rates and the currency exchange rate — and the 83 percent rise in 1999 during the dot-com bubble.

Secondary bourse Kosdaq also performed well, marking a 36.36 percent jump in 2025 after plummeting 21.74 percent in 2024.

"A verse from the Bible — 'Your beginnings will seem humble, so prosperous will your future be' — seems like the apt expression to describe an overwhelmingly successful Korean stock market this year,” said Jung Eui-jung, head of the Korean Stockholders' Alliance.

Park Hee-chan, head of research at Mirae Asset Securities, voiced a similar view, saying, "The domestic market made a stunning reversal, considering it had been weighed down by uncertainties, making it almost impossible to predict what lies ahead."

Park was referring to risks both at home and abroad at the end of 2024, including political turmoil over the martial law declaration by former President Yoon Suk Yeol, and heightened trade risks stemming from the return of Donald Trump to the U.S. presidency.

"Under these circumstances, the new government’s policies have indeed served as a catalyst in boosting the market,” said Hwang Seung-taek, head of research at Hana Securities.

Hwang pointed to President Lee Jae Myung’s efforts to address market undervaluation, such as empowering shareholder rights, after he won the snap election and took office on June 4.

Accordingly, KOSPI finished above 3,000 points for the first time in nearly three and a half years on June 20, closing at 3,021.84 points.

The index accelerated its rally, finishing at 4,042.83 points on Oct. 27, marking its first-ever close above the 4,000-point mark.

Bullish 2026 prospect

As for the 2026 outlook, top analysts at securities firms forecast that President Lee’s vision of an unprecedented 5,000-point KOSPI era is within reach.

They expect the index will trade between 3,500 and 5,500 points, driven by the artificial intelligence (AI) boom that has bolstered market bellwethers such as Samsung Electronics and SK hynix.

Samsung Electronics and SK hynix have exceeded the 100,000-won and 400,000-won thresholds, respectively, and together represent more than a quarter of KOSPI’s total market capitalization.

“The AI-driven semiconductor cycle will remain a key force pushing KOSPI beyond the 5,000-point level, alongside expanding global liquidity and the Lee administration’s market-friendly policies,” Roh Geun-chang of Hyundai Motor Securities said.

Yoon Yeo-cheol of Yuanta Securities also said that KOSPI could hit the 5,000 mark, citing expectations that the two chip makers will generate more than 100 trillion won ($69.38 billion) in combined operating profits in 2026.

Cho Soo-hong of NH Investment & Securities said the semiconductor rally is likely to lead to higher earnings for related listed companies and boost the overall index.

Experts cautioned, however, that political events such as Korea’s local elections in June and the U.S. midterm elections in November could affect KOSPI’s bullish momentum.

“Market growth depends on policy momentum in addition to the AI boom, while election-related uncertainty remains a potential risk,” said Choi Kwang-hyuk, an analyst at LS Securities.

He warned that a potential AI bubble could prompt foreign investors to sell more aggressively, weakening the semiconductor upcycle. “With valuations already high, any market shock could have a significant impact,” he added.