The KOSPI index has reached the unprecedented 5,000 mark for the first time in about 40 years. On the 22nd, the KOSPI opened above 5,000 points for the first time ever and has maintained a sharp rally.
Analysts say the breakthrough of 5,000 indicates that the long-standing undervaluation in the Korean capital market known as the "Korea discount" is being resolved and that the market is being reshaped to meet global standards. With structural improvements in the domestic stock market becoming visible, the market is being reassessed as a full-fledged advanced-economy market.
The stock market for listed securities, which opened in 1980, has faithfully recorded the history of Korea's economy and industry. As Korea's economy went through a high-growth period, a sudden foreign exchange crisis, and an information technology (IT) boom that turned into a bubble, all of it was reflected in the movement of the KOSPI index. The KOSPI index also plunged during the 2008 U.S. financial crisis and the 2020 COVID-19 pandemic. But Korea's economy overcame the crises like a roly-poly toy, and the KOSPI index steadily climbed to higher ground.
◇KOSPI started at a base of 100 in 1980... market-cap method adopted in 1983
KOSPI originally began under the name "composite stock price index." The base date is Jan. 4, 1980, and the method sets the total market capitalization of the stock market for listed securities at 100 at that time and compares it with current market capitalization. KOSPI topping 5,000 means the market capitalization of the stock market for listed securities has increased about 50 times compared to 1980.
The current market-cap-weighted KOSPI began to be applied in earnest on Jan. 4, 1983. Before that, it used the average of stock prices, like the Dow Jones method. But with the switch to the market-cap method, it came to better reflect the overall market trend by considering not only stock prices but also the number of listed shares.
On Jan. 4, 1983, KOSPI closed at 122.52, down 6.47 points (5.3%) from the previous trading day, marking its first start. The index then steadily rose and, on Mar. 31, 1989, broke through 1,000 points for the first time (1,003.31).
The "composite stock price index" took on the name "KOSPI" starting in Mar. 1991. The stock exchange (now Korea Exchange (KRX)) finalized the English name "KOSPI" through an internal contest in Dec. 1990 and began using it officially in 1991.
KOSPI seemed to continue its upward trend, but it plunged to the 200 level due to the fallout from the 1997 foreign exchange crisis (IMF). That effectively sent it back to levels from more than 10 years earlier.
◇Recovery and renewed takeoff after the 2000s
In the 2000s, KOSPI repeatedly rose and fell between the 800 and 1,000 levels before settling at 1,000 in the second half of 2005. On July 25, 2007, it closed at 2,004.22, ushering in the 2,000 era for the first time.
But the U.S.-led financial crisis that erupted that year sent the index back below 1,000 in 2008, with extreme volatility. After a sluggish recovery, it entered a long, narrow trading range from 2012 to 2016, a phase dubbed "Boxpi."
The situation changed when the global economy took a direct hit from the COVID-19 pandemic in 2020. KOSPI fell to the 1,500 level. But as liquidity-driven markets continued on the back of economic stimulus and low interest rates in many countries, it settled above 3,000 for the first time in Jan. 2021. In particular, in Korea, individual investors led the market's rise by aggressively buying domestic stocks against selling by institutions and foreigners in what was called the "Donghak ant movement."
After that, as the world shifted to tightening and the United States led interest rate hikes, the market shrank again. With the Russia-Ukraine war breaking out, the index even fell to the 2,100 level.
KOSPI then rebounded sharply last year in step with the launch of the new administration. As expectations grew for the new administration's market support measures, sentiment shifted and the index crossed 3,000 again. In the second half, as the semiconductor cycle—representing most of KOSPI's market capitalization—improved, the index hit a record high day after day. On Oct. 27, after the Chuseok holiday, it broke through 4,000.
After that, the KOSPI index continued its uptrend on the back of a semiconductor supercycle. This year, through the 19th, KOSPI rose for 12 consecutive trading days without a single down day, and, about three months after breaking the "4,000pi," it has now topped 5,000.
The market is now even expressing hopes for KOSPI to reach 6,000. Global investment bank (IB) JPMorgan, in its 2026 outlook for Asian stock markets, said KOSPI could reach as high as 6,000 points based on the Korean government's "value-up program."
JPMorgan said, "Korea's stock valuations remain undervalued," and noted that government policies encouraging dividend increases, share cancellations, and reduced holding company discounts will lead to a re-rating of KOSPI.