On the 27th, the KOSPI closed above 5,000 for the first time ever. The index finished transaction at 5,084.85, up 2.73% from the previous day. The KOSPI first closed above 4,000 on Oct. 27 last year, meaning it topped 5,000 in just three months.

Market capitalization also hit an all-time high of 4.204 quadrillion won. Since the KOSPI broke through 4,000, market cap has increased by more than about 850 trillion won.

Employees hold a celebratory ceremony in the dealing room of KB Kookmin Bank in Yeongdeungpo-gu, Seoul, on the afternoon of the 27th as the KOSPI closes above 5,000 for the first time ever on a closing basis. /Courtesy of News1

By annual growth rate, Korea's stock market is showing the steepest rise among major countries. The KOSPI jumped 76% last year, and it is up more than 21% so far this year, ranking a dominant No. 1 among the G20.

◇ "Ocheonpi (5000-pi)" led by rotation on expectations for government policy

The exchange cited expectations for government policy as the backdrop for the rally. It said continued pro–capital market policies, including Commercial Act revisions, easing of separate taxation on dividend income, and eradicating unfair transaction, have boosted market confidence.

In addition, the government's recent tax support measures for domestic investment and foreign exchange stability eased some concerns about exchange-rate volatility, further improving investor sentiment.

By sector, rotation is continuing. Buoyed by strong semiconductor earnings, the electrical and electronics sector remains firm. Expectations for wider adoption of artificial intelligence (AI) and advanced technology have put the auto and robotics industries in the spotlight, lifting transport equipment and parts as well.

In the recent phase of heightened geopolitical risk, shipbuilding, defense, and nuclear power—stocks related to machinery and equipment—have also been strong, and buying is spreading across sectors, the exchange said.

◇ "90 trillion" in dry powder, ample firepower

Fund inflows are also supporting the index's rise. As some domestic and external uncertainties ease and expectations for a market uptrend grow, cash on the sidelines is moving in earnest into equities.

In fact, "investor deposits," meaning cash investors leave in securities firm accounts to transact financial investment products such as stocks and funds, surpassed 90 trillion won this month for the first time ever. The flow of money is seen gradually shifting from real estate and deposits to the capital market.

◇ Different from the break above 4,000… "Earnings are supporting the index"

The market views this climb above 5,000 as different from the past. When it topped 4,000 last year, much of the move reflected expectations for an economic recovery and better earnings; this time, rising exports and improved corporate results are showing up in actual indicators and supporting the index's gains.

A board in the dealing room at the Woori Bank headquarters in Jung-gu, Seoul, displays market figures on the afternoon of the 27th as the KOSPI closes above 5,000 points for the first time. /Courtesy of News1

According to the exchange, Korea's annual exports reached $709.7 billion last year, an all-time high. In particular, semiconductor exports in December surged 43.1% from a year earlier, accounting for about a quarter of total exports.

With factors such as expanded shareholder returns and better corporate governance improving the capital market's fundamentals, the rally is seen not as a short-term rebound but as a medium- to long-term uptrend.

◇ "Korea discount eases… global reappraisal under way"

A reappraisal of Korea's stock market within global capital markets is also gaining traction. Since 2025, the domestic market's gain has reached 111.9%, and the "Korea discount" (undervaluation of Korean stocks) is believed to be easing gradually following the launch of the new administration.

Alongside the index's rise, valuation metrics such as the price-earnings ratio (PER) and price-to-book ratio (PBR) are improving, signaling an exit from a period of relative undervaluation. As of the day, the KOSPI's PBR was 1.95 times, more than doubling from 0.9 times at the end of 2024. PER also jumped from 9.28 times to 16.73 times over the same period.

An exchange official said, "With increased AI-related investment, expectations for semiconductor earnings are growing, and as policies to activate the capital market spread, there is a chance for a further rally," but added, "Short-term profit-taking after a sharp rise, global geopolitical risks, and uncertainty in major countries' currency policies are cautionary factors."

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