Is the stock market adage that "stocks rise after the holidays" true? Looking at data from the past 10 years, the KOSPI's trend was half-and-half.
According to the Korea Exchange (KRX) on the 18th, an analysis of KOSPI returns on the first trading day immediately after the Lunar New Year holidays over the past 10 years from 2016 to last year showed five gains and five declines. The 10-year average return was minus (-) 0.10%, a slight drop.
The results were similar on a five-trading-day basis after the holidays. Gains and declines were split five times each.
The year with the highest increase was 2022, with a 3.96% rise over the five trading days after the holidays. At the time, it was interpreted as the impact of bargain hunting after a sharp 6.03% drop over the five trading days before the Lunar New Year holidays.
2024 (2.29%) followed, then 2023 (1.25%), 2018 (1.23%), and 2021 (0.23%) in order of the largest gains.
By contrast, the biggest drop was in 2020, with a 5.67% plunge over the five trading days after the holidays. It was followed by 2016 (-1.77%), 2017 (-0.28%), 2019 (-0.09%), and 2025 (-0.002%).
Some have long noted the so-called "holiday effect," in which investors sell stocks before the holidays to avoid potential external risks during the break and then buy them back after the holidays, pushing prices higher. However, in actual statistics, no clear correlation was found between the KOSPI rising and the period immediately after the Lunar New Year holidays.
Experts analyzed that external factors, such as releases of overseas economic indicators or global events, more often determined the market's direction than the holidays themselves.
After the Lunar New Year holidays this year as well, domestic and external factors that emerged during the market closure are expected to have an impact. Lim Jeong-eun, a researcher at KB Securities, said, "With major corporations' earnings announcements entering the final phase, U.S.-driven events, such as remarks by President Donald Trump during Korea's market closure, will act as short-term variables."