KOSPI 5,000: South Korea Enters New Financial Era

The KOSPI index breached the 5,000-point mark for the first time on January 22, 2026, in Seoul. This historic achievement follows a massive surge in AI demand and favorable government policies, marking a 46-year milestone for the South Korean capital market since its inception in 1980.

Specifically, the index reached this height only 87 days after surpassing the 4,000-point level. This rapid acceleration suggests a significant shift in investor sentiment regarding the previously undervalued Korean market.

Samsung Electronics played a pivotal role in this rally. The company reached a share price of 160,000 KRW on January 22, 2026, after maintaining its position above the 150,000 KRW mark earlier in the week.

Similarly, SK Hynix witnessed a substantial gain of 3.92%. The stock price approached 780,000 KRW during intraday trading, reflecting the intense global demand for high-performance memory chips required for artificial intelligence.

Beyond the semiconductor sector, Hyundai Motor Company continued its impressive streak. The automaker saw a 7% increase on January 22, 2026, following a 20% jump over the preceding two days.

Investors are increasingly focused on Hyundai’s Physical AI initiatives. This technological pivot has allowed the automotive giant to capture the interest of both domestic and foreign market participants.

External factors also provided a tailwind for the Seoul market. The New York Stock Exchange saw the Dow Jones, Nasdaq, and S&P 500 all close with gains exceeding 1.1% on the previous day.

Furthermore, geopolitical news influenced market movements. Donald Trump announced via social media that a framework for a Greenland and Arctic agreement was established, potentially easing global trade tensions.

Trump also stated that the United States would not impose tariffs on Europe starting February 1, 2026. This announcement sparked a buying spree among both foreign investors and individual retail traders.

On the Korea Exchange, individual investors net purchased 426.2 billion KRW worth of shares early in the session. This domestic enthusiasm countered the net selling by foreign and institutional investors during the same period.

However, the celebration faces a sobering reality from the real economy. The Bank of Korea reported on January 22, 2026, that the fourth-quarter real GDP growth for 2025 contracted by 0.3%.

This negative growth contradicted earlier expectations of a modest expansion. A sharp decline in construction and facility investment significantly hampered the broader economic recovery during the final months of last year.

Consequently, the reliance on semiconductors remains a double-edged sword. While chips contributed 0.9 percentage points to annual growth, other export sectors like automobiles and machinery faced a 2.1% decline in the fourth quarter.

Moreover, the KOSPI still lags behind international peers in terms of valuation. Korean listed companies trade at 1.6 times their asset value, which is significantly lower than the S&P 500’s 4.7 times.

In response, political leaders are moving to implement the 3rd Commercial Act revision. This legislation aims to mandate the retirement of treasury stocks to enhance shareholder value and sustain the market rally.

In summary, the KOSPI 5,000 era represents a transformative moment for South Korea. While tech prowess drives the index higher, the underlying economic fragility and sector concentration require urgent structural attention for long-term stability.