[Inside Chodong] With KOSPI at 3,000, What Will It Take to Reach 5,000?

KOSPI Rises 28% in the First Half of the Year
Top Performer Among Major Global Markets... A Dramatic Turnaround from Last Year's Bottom
Policy Optimism Fuels the Rally
Swift Policy Implementation Needed to Sustain Momentum

When I recently asked a securities firm official about the industry's biggest topic of interest these days, the answer was "KOSPI 5000." Given the current market conditions, not only securities firms but also anyone investing in stocks is naturally focused on how much further the KOSPI might rise.

On the 25th, the KOSPI index opened at 3127.79, up 24.15 points from the previous trading day, as dealers were working in the dealing room of Hana Bank in Jung-gu, Seoul. 2025.6.25. Photo by Kang Jinhyung

When President Lee Jaemyung first proposed the era of KOSPI 5000 as a campaign pledge before the presidential election, the market response was lukewarm. Rather than believing outright that the KOSPI would reach the 5000 mark, most people expected that the aim was to help the KOSPI, which had been underperforming compared to overseas markets due to the so-called Korea Discount (the undervaluation of the Korean stock market), break out of its slump and start rising. Most experts commented that "it's not impossible, but the probability is not high," or that "it's still too early."

However, as the KOSPI quickly climbed past the 3000 level, the mood changed significantly. Expectations grew that the Korea Discount could be resolved, and the idea that reaching the 5000 mark might not be impossible began to take hold. Individual investors, who had previously left the domestic stock market while saying "escaping the Korean market is a sign of intelligence," are gradually returning. Foreign investors, who had been net sellers in the domestic market since last August, also switched to net buying after 10 months.

In the first half of this year, the KOSPI rose by 28 percent?the highest increase among the G20 countries. This represents a dramatic turnaround from its bottom ranking at the end of last year. The index also regained the 3000 level for the first time in three and a half years. The total market capitalization of the domestic stock market has surpassed 2,900 trillion won and is now on the verge of breaking the 3,000 trillion won mark. Investor deposits, which represent funds waiting to enter the market, are nearing 70 trillion won. According to the Korea Financial Investment Association, as of June 26, investor deposits stood at 69.056 trillion won. This is the highest level in three years and five months since January 28, 2022, when it reached 70.3447 trillion won. Domestic securities firms have been steadily raising their KOSPI forecasts. Some predict that the index could reach the 3,600 level in the first half of next year. The global investment bank JP Morgan has also projected that the KOSPI could climb as high as 3,500.

The forces driving the KOSPI upward have been political stability and policy expectations. The political uncertainty caused by the martial law crisis in December last year has been resolved, and the new administration's upcoming policies and the optimism surrounding them have served as catalysts for the stock market's rise. These internal factors have provided strong support for the market, allowing the KOSPI to maintain its upward momentum without being significantly affected by external variables.

After breaking through the 3,100 level, the KOSPI has entered a brief consolidation phase. For the index to rise further beyond the gains driven by expectations, it is essential that government policies are implemented swiftly and as planned. The Lee Jaemyung administration is pushing for amendments to the Commercial Act, the introduction of separate taxation for dividend income, and the mandatory cancellation of treasury shares. Among these, the amendment to the Commercial Act is expected to be passed by the National Assembly this week. The securities industry believes that revising the Commercial Act could be the key to resolving the Korea Discount.

For a long time, the domestic stock market has been held back by the Korea Discount, causing both domestic and foreign investors to turn away. If policy initiatives aimed at improving the structure of the capital market can break these shackles and lead to genuine value enhancement, the KOSPI 5000 may not be such a distant goal after all.