The KOSPI surged 6.4% on Thursday, vaulting past the "dream threshold" of 7,000 in a single session. The benchmark index climbed to 7,384.56, reaching the milestone just 47 trading days after breaking through the 6,000 mark. Driven by aggressive foreign buying, Samsung Electronics (005930.KS) jumped 14% to join the "$1 trillion market cap club," while SK hynix (000660.KS) soared 10%, leading the rally. The KOSPI rose 75.5% last year and has already gained 75.3% this year, entering uncharted territory.
This rally cannot be dismissed as a temporary tailwind from the semiconductor super cycle. It is worth noting, in particular, that outdated regulations — long a chronic obstacle to Korea's capital markets — are finally being dismantled. A representative change is the reactivation of the "foreign investor omnibus account," which has regained its substantive function for the first time in nine years. The hassle of overseas investors having to open individual accounts with domestic brokerages has been eliminated, and trading through encrypted identification numbers is now possible, lowering entry barriers. Just as Korean retail investors shop for U.S. stocks, "American retail investors" now have a fast lane to easily buy Korean equities.
With a combined market capitalization (KOSPI and KOSDAQ) of 6,730 trillion won ($4.9 trillion), the Korean stock market has overtaken the U.K. to rank eighth globally, moving one step closer to global standards in investor convenience. But this is no time to bask in the soaring index. The related institutional framework must be upgraded to match the market's expanded size, so that Korea can emerge as a global hub. Only when three elements — consistency in trading rules, predictability in taxation, and transparency in corporate governance — are in place will long-term capital flow into the domestic market.
From a sober perspective, the Korean stock market still has a long way to go. Many tasks remain unresolved, including a short-selling policy that has lost credibility through repeated cycles of permission and prohibition, and trading hours that are shorter than those in advanced markets. The burden of the securities transaction tax and the controversy over double taxation on dividends are among numerous obstacles undermining market vitality. Without supporting tax reforms — including the phased abolition of the transaction tax, easing of dividend income tax, and strengthened tax incentives for long-term holdings — liquidity could flow out at any time. Above all, it must be acknowledged that the semiconductor super cycle cannot last forever. Still, if Korea leverages the liquidity pushed up by the semiconductor boom to modernize its market institutions, KOSPI 7,000 could mark not a bubble but the starting point of a structural re-rating. Now is the prime opportunity to transform Korea's stock market into a true global core market.
