As the so-called "Santa rally," when stock prices rise at year-end, has appeared with a 50% probability over the past 10 years, investors are watching to see whether Santa will visit this year as well.
According to the Korea Exchange (KRX) on the 14th, the KOSPI index rose 6.3% from 3,920.37 points on the 1st to 4,167.16 points on the 12th. As a result, even though the early part of this month is not yet over, expectations for a Santa rally are building.
The Santa rally is a phenomenon in which stock prices rise sharply at year-end and the start of the new year. Around Christmas, bonus payments, increased consumption, and improved earnings at corporations lead to higher stock prices, a kind of "calendar effect."
Looking at the KOSPI's December return over the past 10 years (2015–2024), excluding this year, it finished higher five times, or half. It rose in 2016 (2.15%), 2019 (5.06%), 2020 (9.08%), 2021 (2.69%), and 2023 (6.00%), while it fell in 2015 (-3.09%), 2017 (-0.32%), 2018 (-4.26%), 2022 (-9.81%), and 2024 (-2.24%).
When comparing each year's cumulative KOSPI return for January–November with the December trend, most years showed a similar pattern except for 2015, 2017, and 2021. In particular, in bull markets, the favorable tone tended to continue into year-end.
For January–November this year, the KOSPI surged more than 60%, from 2,398.94 points to 3,926.59 points. Arithmetically, that works out to an average monthly gain of about 5.79%. On top of that, the December (1–12) gain already exceeds this monthly average, adding to expectations for further increases.
Expectations for a Santa rally are also high in the U.S. stock market. Moon Nam-joong, a researcher at Daishin Securities Co., said, "The December Federal Open Market Committee (FOMC) delivered gifts in the form of a rate cut and short-term Government Bonds purchases."
Shin Hyun-yong, a researcher at Yuanta Securities Korea, said, "This year's domestic stock market will be a year opened by large caps and closed by mid- and small caps," adding, "There is a high likelihood that a relatively stronger Santa rally will appear in mid- and small caps."