With Korea's stock market experiencing a "Santa Rally" roughly every other year over the past decade, investors are watching closely to see if the benchmark index will end this year on an upswing.
According to the Korea Exchange on Sunday, the KOSPI rose 6.30% from 3,920.37 on December 1 to 4,167.16 on December 12. Though only the first half of the month has passed, the index is showing an overall upward trend, fueling expectations of a Santa Rally.
A Santa Rally refers to a phenomenon where stock prices rise significantly around the year-end and new year period. It is a type of "calendar effect" where Christmas bonuses boost consumption and corporate earnings, leading to market strength. Over the past 10 years from 2015 to 2024, the KOSPI recorded positive returns in December five out of ten times.
By year, the KOSPI gained in December 2016 (2.15%), 2019 (5.06%), 2020 (9.08%), 2021 (2.69%), and 2023 (6.00%). In contrast, the index fell in December 2015 (-3.09%), 2017 (-0.32%), 2018 (-4.26%), 2022 (-9.81%), and 2024 (-2.24%).
The KOSPI surged an average of 5.79% per month from January to November this year. The index climbed 63.68% from 2,398.94 on January 2 to 3,926.59 on November 28, recording a standout performance among major markets. The fact that gains so far this month exceed the January-November monthly average, combined with remaining positive catalysts in the U.S. market, is boosting Santa Rally expectations.
"The first Santa from the U.S., the Federal Open Market Committee, delivered gifts of a rate cut and short-term Treasury purchases," said Moon Nam-joong, a researcher at Daishin Securities. "President Trump is expected to nominate the next Federal Reserve chair around Christmas, claiming credit for the historic highs in U.S. markets this year, bringing a second Santa."
Shin Hyun-yong, a researcher at Yuanta Securities, forecast that "Korea's stock market this year will be one where large-caps led and small- to mid-caps finish," adding that "there is a greater possibility of a Santa Rally centered on small- to mid-cap stocks."
