South Korea’s KOSPI Index was one of the best-performing stock market benchmarks globally in 2025 as it jumped by 75.53% and reached its all-time high. It was trading at KRW 4,215, up by 85% from its lowest level this year.
Reasons behind the KOSPI Index rally
There were several important drivers for the KOSPI Composite Index this year. The first notable one came from Lee Jae-myung, the country’s president who pledged to push it to KRW 5,000 during his term.
As part of his plan, he noted that the country would implement some policies to boost the stock market. These policies included corporate governance reforms aimed at removing the South Korean discount.
This discount refers to the chronic undervaluation of South Korean stocks compared to their peers. Indeed, this discount still exists, with the index having a price-to-earnings (P/E) ratio of 17 compared to S&P 500 Index’s 22.
The KOSPI Composite Index also benefited from the ongoing boom in the artificial intelligence (AI) industry. This boom has lifted several companies that offer products in the industry. For example, Samsung Electronics’ stock jumped by 127% this year.
SK Hynix, another company in the tech industry, soared, with its market cap jumping to over $306 billion. This surge coincided with that of its top competitors, like Western Digital and Micron, which were the top gainers in the S&P 500 Index.
The KOSPI Index also jumped after South Korea and the United States reached a deal. Donald Trump reduced tariffs to 15% from the previous 25%, while South Korea pledged to invest $350 billion in US assets. The focus areas of these investments will be in shipbuilding, semiconductors, and infrastructure.
While the 15% tariff is still a high one, the deal helped to reduce the tensions that existed between the two countries. South Korea now hopes that the US Supreme Court will find the 15% tariff illegal.
The actions by the South Korean Central Bank also had an impact on the KOSPI Index. The central bank slashed interest rates four times, bringing the benchmark rate to 2.5%.
Most importantly, officials pointed to more cuts in 2026, citing the slowing economy. Still, the country’s bond yields continued rising despite the rate cuts. The ten-year yield rose to 3.385% from the year-to-date low of 2.5%.
KOSPI Composite Index technical analysis
The daily chart shows that the KOSPI Index has been in a strong bull run this year. It ends the year at KRW 4,215, its highest point on November 3.
The index has remained above all moving averages and the key resistance level at $3,835, its lowest point in November this year. It has remained above all moving averages.
The Relative Strength Index (RSI) and the MACD indicators have continued rising. Therefore, the index will likely continue rising in the coming year as bulls target the key target at KRW 5,000. This view will be confirmed if it moves above the resistance at KRW 4,223 as this will invalidate the double-top pattern.
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