Quick Take South Korean stocks surged to their highest level of 2025, with the KOSPI gaining 1.26% to close at 3,260.05 in its sixth consecutive session of gains. Tech giants led the charge amid expectations of capital gains tax reversals and Fed rate cuts.
The Breakdown The rally was fueled by a potent combination of factors: Finance Minister Koo Yun-cheol hinted at potentially scrapping plans to lower the capital gains tax threshold from 5 billion won to 1 billion won – a proposal that had spooked investors. Meanwhile, weaker-than-expected US jobs data reinforced bets on Fed rate cuts, lifting Asian markets broadly.
Samsung Electronics jumped 2.0% and SK Hynix surged nearly 4%, while chemical giant LG Chem spiked 6.35%. Foreign investors poured in a net 660 billion won ($475 million), signaling renewed confidence in Korean equities.
Investor Lens This looks like classic relief rally territory. The potential tax policy U-turn removes a major overhang that's been weighing on Korean stocks, while the broader tech momentum provides fundamental support. With foreigners back to net buying and the index breaking above July's previous high of 3,254, momentum traders will be watching for sustained volume.
Korea's heavy weighting toward tech and chemicals makes it particularly sensitive to both global semiconductor cycles and domestic policy shifts – both currently working in its favor.
Context Check Korea's market surge reflects broader Asian optimism around Fed easing, but the domestic tax reform angle adds a uniquely Korean twist. The government's apparent willingness to walk back investor-unfriendly policies signals pragmatic policymaking in an election year.
This also highlights Korea's ongoing challenge of balancing populist tax policies with maintaining Seoul's competitiveness as a regional financial hub. With Korean stocks still trading below regional peers on valuation metrics, sustained policy support could unlock further gains.
Source: The Korea Herald
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