Kospi passes 5,000: Is the rally just getting started?

Electronic display boards at Hana Bank dealing room in central Seoul show financial markets on Jan. 23. [JOONGANG ILBO]

 
The Kospi has broken through the 5,000-point threshold, but doubts remain over whether the rally is sustainable. While some expect to see further gains, potentially beyond 5,500 points, others warn of a possible pullback. 
 
Experts generally say the surge is built on solid foundations — strong corporate earnings and the government’s market-friendly policies. But critics warn of a potential market correction, pointing to performance overly concentrated in specific sectors, such as semiconductors, and the unproven run-up in certain stocks like Hyundai Motor that may not be supported by underlying earnings.
 

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After the Kospi surpassed 5,000 points on Thursday — just three months after breaking the 4,000-point milestone — the benchmark index closed up 0.76 percent at 4,990.07 points on Friday, led by institutions and foreigners.  
 
 
Further upside vs imminent correction
 
The Kospi nearly doubled in just a year, far outpacing the growth of major indexes in the United States, Europe and Japan. Yet, analysts say there is still potential for further gains, citing the ongoing semiconductor boom and growing optimism that the auto sector will contribute to the rally.  
 
Optimists believe stronger earnings from the two major chipmakers — Samsung Electronics and SK hynix — could push the index even higher.  
 
“Semiconductor companies’ earnings this year are projected to come in at surprise levels, so it’s hard to say the recent Kospi rally has exceeded expectations,” said Park Seok-hyun, an analyst at Woori Bank. “There’s still plenty of room for further gains, with the index potentially climbing to 5,500 points this year.”
 
Samsung Electronics is projected to record an operating profit of 145 trillion won ($98.89 billion) this year, up 233 percent from last year, driven by rising memory chip prices amid tight supply, according to KB Securities. It estimates SK hynix’s operating profit will jump 154 percent over the same period to 115 trillion won. The brokerage projects the index to range between 4,200 and 5,700 points, describing the recent milestone as the early phase of a structural upswing.  
 
“Last year, the market was largely driven by semiconductors, along with shipbuilding and defense. This year, the rally has broadened to include the auto sector, helping push the index to the 5,000-point mark,” Park added.  
 

 
Hyundai Motor shares have surged 70 percent this year, overtaking General Motors as the world’s fourth most valuable automaker on investor optimism over the life-size Atlas humanoid robot by Boston Dynamics, the robotics company owned by the automaker.
 
The rally began earlier this month following the unveiling of the latest version of the humanoid robot, with momentum fueled by its signal that Hyundai Motor is evolving from a conventional automaker into a robotics-driven company.  
 
However, some warn that Hyundai Motor’s market could face a correction, describing the recent gains as speculative.  
 
“The sharp climb in the days leading up to the 5,000-point mark was largely driven by the auto sector, which is showing strong momentum,” said Huh In, an economics professor at the Catholic University of Korea. “However, because the rally is based on speculation over the potential earnings impact of Hyundai Motor’s investment in robotics, much of it has yet to be realized in concrete terms, making it vulnerable to significant volatility.”
 
 

Zachary Jackowski, Vice President, General Manager of Atlas at Boston Dynamics, appears on stage with the ATLAS prototype robot during a press conference at the 2026 International CES, at the Mandalay Bay Convention Center in Las Vegas, Nevada, on Jan. 5. [UPI/ YONHAP]

 
Key market influencers



Major drivers of future market performance include the implementation of market-friendly policies and the U.S. economy.  
 
The government has pledged several ambitious policies to make the financial market more attractive and stable. These include the third revision of the Commercial Act, which mandates the cancellation of treasury shares, and the extension of foreign exchange trading hours from the current 2 a.m. to 24 hours starting in July — a major step aimed at upgrading Korea’s status in the Morgan Stanley Capital International (MSCI) index from emerging-market to developed-market status. This move is expected to attract net foreign inflows ranging from $5 billion to $36 billion.
 
“Along with efforts to enhance shareholder returns through value-up initiatives and the road map toward inclusion in the MSCI developed market index, foreign investors are more likely to increase inflows and maintain long-term investments,” said Lee Won, an analyst at Bookook Securities.  
 
Another key factor that could shape market performance is the government’s sustained involvement — whether it be direct or indirect — in supporting markets, a trend that reflects broader global developments.
 
"Whether through fiscal expansion or monetary policy, governments globally — from the United States to Japan — are stepping up interventions that could support markets, and Korea is likely to move in the same direction as well," said Hwang San-hae, an analyst at LS Securities, especially ahead of the local elections scheduled for June.
 
Korea’s economy has entered a phase of large-scale fiscal expansion with this year's national budget set at 730 trillion won to stimulate economic growth and innovation.
 
But any signs of weakening in the U.S. economy could also pull down the Kospi, as the index's leading companies are largely chip-reliant exporting firms.
 
“If the U.S. economy were to turn around and economic indicators forced the Fed to cut rates, the market could move in the opposite direction,” Prof. Huh added. “But the likelihood seems low as the economy appears more stable than expected, looking at recent indicators, like the labor market.”
 

BY JIN MIN-JI [jin.minji@joongang.co.kr]