In 2026, rather than a rapid rise, the stock market is highly likely to move within a boxed range with high volatility, making the gap between sectors and corporations even more pronounced. For investors, selection and focus, and risk management will become even more important this year.
On the 24th in Seoul's Jongno District at the office of Mirae Asset Global Investments, Research head Kim Jung-soo cited "volatility" and "differentiation" as the keywords that will run through the 2026 stock market.
Kim said of Korea's stock market in 2025 that it was a year led by a handful of large-cap tech and artificial intelligence (AI) names, shipbuilding, defense and nuclear power. Kim diagnosed that as the gaps between industries and corporations widened dramatically, a selective approach that rigorously picks individual stocks became more important than ever, rather than a simple index-tracking, diversified strategy.
In fact, last year the KOSPI jumped more than 75%, the highest gain among major markets. But unlike the index's flashy report card, not every investor smiled. Kim described this as a "gap between the index and the felt economy."
He said, even within semiconductors, so-called materials, components and equipment stocks were eclipsed as large caps such as Samsung Electronics and SK hynix monopolized the rally, and analyzed that it was a market that did not work for investors who pursued a "beta play," expecting mid- and small-caps to follow when large caps rose. In the end, while the index itself hit a record high, it was a year in which the sense of being left out was also pronounced depending on stock selection.
This tendency is expected to become more pronounced in the 2026 market. Kim said 2026 is an extension of 2025 but will likely judge results more coldly than expectations, adding that even within the same tech and the same AI-related names, stock performance will diverge widely by corporation depending on whether they actually generate revenue.
In particular, with the KOSPI having surged more than 75% and settled above 4,000 last year, he added that investors should lower their return expectations this year. That is because the market has become that much more difficult.
Kim analyzed that if there were many undervalued corporations, overall gains could be expected simply from liquidity flowing into the market or business-cycle improvement, but in the era of KOSPI 4,000, most stocks are at high price levels, making it much harder to find names that can climb further from here.
So what strategy should individual investors use? Kim presented "selection and focus," and "thorough risk management," as the solutions.
He said that even in December, various growth themes such as robots and space repeatedly surged and plunged, showing heightened volatility, and added that if a mid- and small-cap and individual-stock-driven market emerges this year, this tendency could intensify further.
He advised that rather than vague themes, a strategy based on corporate results and fundamental competitiveness is effective, and that investors should focus on high-quality names based on "who will survive to the end" rather than the vague expectation of "what will be hot."
In particular, the importance of asset allocation looks set to grow more than ever this year. Kim said the hardest thing for investors to resist is FOMO, the fear of missing out, and noted that it is important to secure psychological stability through asset allocation across various fields such as the domestic stock market, the U.S. stock market, bonds and gold.
He advised that investors interested in exchange-traded funds (ETFs) should also pay attention to active ETFs.
Kim said that with active ETFs, when a particular sector or stock looks attractive, fund managers can actively increase or decrease exposure, which can help investors build their portfolios.
For sectors and leaders to watch next year, he cited ▲ the semiconductor supply chain centered on AI infrastructure ▲ power and thermal management ▲ software, security and IT services.
He offered an overwhelmingly strong outlook for large-cap semiconductor names. He said the market expects Samsung Electronics to post 39 trillion won in operating profit this year, but it is projected to earn 100 trillion won next year. SK hynix is also expected to post 100 trillion won in operating profit next year, and these two corporations are likely to account for half of the KOSPI operating profit consensus next year.
He also flagged tandem growth in the software and security industries as AI adoption spreads. Kim predicted that, in step with the government's KOSDAQ revitalization policy, mid- and small-cap tech corporations with both technology and results will have more opportunities to be re-rated.
Along with this, he also held a positive view on ▲ shipbuilding ▲ defense ▲ nuclear power ▲ entertainment ▲ holding companies. Kim explained that while shipbuilding, defense and nuclear power have already risen a lot, he does not think it is time to sell.
For the entertainment industry, he cited as positives the low likelihood of being affected by policies such as tariffs by U.S. President Donald Trump and the signs in China of lifting the current ban on Korean cultural content. On holding-company-related names, he explained that the government is pushing a third amendment to the Commercial Act centered on making treasury-share cancellation mandatory, which raises the likelihood of re-rating.
However, this year's market is likely to show a pattern of being hotter in the first half and weaker in the second, with volatility rising toward year-end. He explained that the results of corporations such as Samsung Electronics and SK hynix are expected to be strong, and with local elections in June, market-boosting measures are anticipated, while in the United States, liquidity is expected to increase due to interest rate cuts.
Warning signals are expected to emerge from the second half. Kim said that in the second half, inflation could resurface due to the effects of rate cuts, raising the case for rate hikes, and that policy-shift risks tied to the results of the U.S. midterm elections in November will also persist.