The KOSPI index surged 75.6% this year, marking the third-highest annual gain in Korean stock market history. The KOSDAQ index also rose 36.5%, outperforming all major markets including the United States, Japan, and the European Union. The dramatic turnaround comes just one year after Korea's worst market performance following the martial law crisis in late 2024.
The KOSPI closed at 4,214.17 on Monday, down 6.39 points (0.15%) from the previous session, according to Korea Exchange. The index briefly touched 4,226.36 during trading but finished just 0.18% below its all-time high of 4,221.87. The KOSDAQ ended the year at 925.47, down 7.12 points (0.76%).
Institutional investors supported the market during a sluggish first half, while foreign investors drove gains in the second half. Combined data from Korea Exchange and Nextrade showed institutions were net buyers of 18.2 trillion won for the year, while individuals and foreigners were net sellers of 19.7 trillion won and 9 trillion won, respectively.
The KOSPI's 75.6% annual gain surpassed 1988's 72.8% return, ranking third after 1987 (92.6%) and 1999 (82.8%). Considering that economic growth rates exceeded 11-12% during those earlier periods, this year's performance was achieved under far more challenging conditions including domestic and international policy uncertainty, won weakness, and sluggish growth. After falling to 2,293.70 on April 9 amid the martial law crisis and U.S. reciprocal tariff threats, the market rallied following the new government's inauguration, as political uncertainty eased and expectations grew for market support policies and a semiconductor super cycle.
Despite uncertain conditions, the KOSPI posted the world's highest stock market gain, ranking first among G20 and OECD nations. It outperformed Chile (57%), Colombia (53%), and Israel (51%), as well as Japan's Nikkei 225 (26.2%), Taiwan's TAIEX (24.6%), the U.S. Nasdaq (21.6%), and the S&P 500 (17.4%). Korea's chronic valuation discount also normalized. The KOSPI's price-to-earnings ratio improved from 12.66 at the start of the year to 17.59, while the price-to-book ratio rose from 0.84 to 1.35. Average daily trading volume and value increased 6.4% and 57.1% to 518 million shares (including 87 million on Nextrade) and 16.9 trillion won, respectively.
Samsung Electronics (005930.KS) and SK hynix (000660.KS) were the undisputed drivers of this year's rally. Riding strong demand for memory semiconductors fueled by artificial intelligence, Samsung Electronics (119,900 won) and SK hynix (651,000 won) gained 125.4% and 274.35% respectively, both reaching all-time highs. Total KOSPI market capitalization grew by approximately 1,515 trillion won from 1,963.3 trillion won at the end of last year to 3,477.8 trillion won. Samsung Electronics and SK hynix alone accounted for 49% of this increase.
Market concentration in large-cap stocks was notable. The number of stocks that more than tripled in price reached 80 companies (29 on KOSPI, 51 on KOSDAQ), compared with 9 in 2022, 52 in 2023, and 11 in 2024. Besides SK hynix, KOSPI 200 components that surged three to four times included SK Square (364.1%), APR (362.0%), Hyosung Heavy Industries (353.2%), ISU Petasys (348.2%), Doosan Enerbility (329.1%), Hyundai Rotem (278.1%), Doosan (206.3%), and Hanwha Aerospace (192.7%).
The market cap gap widened between conglomerates with subsidiaries aligned with global megatrends in semiconductors, shipbuilding, defense, and nuclear power, and those without. Doosan Group's market cap reached 74.46 trillion won, up 202.0% year-on-year, while SK Group's rose to 601.1 trillion won, up 197.5%—both roughly tripling. Hanwha Group (up 181.5%) climbed to sixth place by market cap, surpassing POSCO and Celltrion.
"With the KOSPI reaching the historic 4,000 level for the first time and recording exceptional returns, investors should maintain a positive outlook on the Korean market," said Lim Jung-eun, a researcher at KB Securities. "Next year, attention should focus on sectors expected to sustain earnings momentum."
