Korea’s Stock Market Outlook for 2026: Can the KOSPI Keep Rising?

As 2025 draws to a close, optimism continues to build across Korea’s investment community. Out of 58 local market strategists surveyed, only a handful believe the KOSPI will stay near the 3000 range by the end of next year. The majority foresee a continued rally, driven by strong semiconductor performance, abundant liquidity, and ongoing government efforts to support the market.

Semiconductors Powering the Momentum

Semiconductors remain at the heart of Korea’s economic engine. According to the Korea Exchange, Samsung Electronics and SK hynix now account for over 31% of the entire KOSPI’s market capitalization. Their combined influence essentially sets the tone for the broader market. Samsung Electronics recently reported third-quarter earnings exceeding expectations, while SK hynix is projected to post record-high operating profits exceeding 11 trillion won. If realized, it would mark the first time in history the company’s profits surpass 10 trillion won — a symbolic moment underscoring the global semiconductor boom. Experts such as Park Se-joong of Kiwoom Asset Management predict that this semiconductor-led earnings recovery will likely extend well into 2026. Similarly, NH-Amundi CIO Park Jin-ho expects the chip rally to persist through the first half of next year.

Liquidity Flooding into Equities

Another factor fueling the rally is the massive inflow of capital. Data from the Korea Financial Investment Association shows investor deposits have surged past 80 trillion won — an all-time high. This money, waiting to enter the market, represents strong buying potential. Foreign investors are also back in full force. As of late October, their total holdings in Korean stocks reached 1,125 trillion won, nearly double the figure at the end of last year. Net foreign purchases have already surpassed 27 trillion won in 2025, signaling renewed global confidence in Korean equities. Many analysts believe the next leg of the rally could be triggered by a potential interest-rate cut. The Bank of Korea held its base rate at 2.5% in October, but expectations for a cut remain high. A rate reduction would unleash further liquidity, amplifying demand for stocks.

Government Policy and Valuation Advantage

Korea’s government has been openly supportive of the stock market through shareholder-friendly initiatives. Analysts point out that Korean equities remain undervalued compared with major global indices. Nearly half of KOSPI200 companies trade below a price-to-book ratio of 1, far higher than in the U.S. or Japan — suggesting strong room for re-rating. Samsung Asset Management’s Jung Jae-wook emphasized that the government’s credibility and focus on capital-market reforms are gradually restoring investor confidence. Meanwhile, Integral Investment’s CEO Yoon Je-min expects fiscal expansion ahead of the June 2026 local elections to further stimulate the economy.

The Other Side of the Story: Risks and Caution

Still, not everyone is convinced the rally will last indefinitely. Some strategists warn that the so-called “semiconductor super-cycle” could turn into a bubble if profits peak too soon or if global demand weakens. Potential risks include renewed U.S.-China trade tensions, stagflation pressures in developed economies, and a possible reversal of monetary easing. If inflation resurfaces, both the Federal Reserve and the Bank of Korea may pivot back toward tightening, which could cool the market’s momentum. Housing prices also remain a key domestic variable. A sharp rebound in real estate could limit the central bank’s ability to cut rates, thereby reducing the liquidity that currently supports equities.

Bottom Line

While short-term volatility is inevitable, the prevailing sentiment among experts leans toward cautious optimism. As long as liquidity remains strong and semiconductor demand continues, Korea’s stock market may well climb toward the 4400–4600 range in 2026. Investors are advised to keep a balanced approach — enjoying the benefits of this AI-driven boom while staying alert to shifting macroeconomic tides. The KOSPI’s future may not be guaranteed, but its direction is clearly pointing upward for now.

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