Kospi Breaks 4000 Barrier Amid Anticipation of U.S. Rate Cuts and Diplomatic Progress

The Kospi index breached the 4000 milestone on October 27, driven by strong investor optimism surrounding potential U.S. Federal Reserve interest rate cuts and key diplomatic summits among global leaders. This historic surge reflects heightened expectations for pivotal geopolitical developments and corporate events, resulting in a rally for individual stocks tied to these developments.

At 9:45 a.m. Korea Standard Time (KST), the Kospi was trading at 4034.63, up 93.04 points (2.36%) from the prior session’s close. The index had opened at 3999.79, rising 58.20 points (1.48%) compared to Wednesday’s closing at 3941.59. This momentum pushed the index above the psychologically-critical 4000 mark for the first time ever.

Foreign and Domestic Purchases Propel Market, While Institutions Sell Off

The Kospi’s rally was underpinned by significant buying activity from retail and foreign investors, who purchased KRW 2.23 trillion and KRW 1.29 trillion worth of shares, respectively. Institutional investors, however, tempered the rally, offloading KRW 3.39 trillion in net sales.

Commenting on the market dynamics, Han Ji-young, an analyst at Kiwoom Securities, explained, “The Federal Open Market Committee (FOMC) meeting this month, coupled with key summits such as the U.S.-China and South Korea-U.S. meetings at the Asia-Pacific Economic Cooperation (APEC) event, have been major catalysts for this surge. Additionally, the upcoming earnings reports from U.S. tech giants Apple, Microsoft, Meta, and Alphabet, alongside domestic players like SK Hynix, are critical for sustaining Kospi’s upward trajectory.”

Sector performance was mixed, with most industries posting gains, barring insurance (-0.43%) and real estate (-0.06%). Notable performers included transportation equipment and parts (3.17%), construction (4.52%), and the financial sector (2.02%).

Market Leaders Set Records Amid Broader Optimism

Leading the rally, blue-chip stocks saw record-breaking performances. Samsung Electronics topped KRW 100,000 per share for the first time, trading at KRW 101,550 (+2.78%). Similarly, SK Hynix reached an all-time high, surging 4.31% to KRW 532,000. Other key contributors were HD Hyundai Heavy Industries with a robust 5.39% rise and Doosan Enerbility, up 1.36%.

This movement among market giants highlighted renewed confidence in South Korea’s economic and corporate resilience, aided by broader global liquidity conditions and diplomatic developments that promise to stabilize trade and tariff policies.

Tariff Negotiations Loom; KOSDAQ Index Sees Steady Climb

As the spotlight shifts to tariff discussions ahead of the South Korea-U.S. summit, attention has turned to the potential impact on markets and industries sensitive to import-export dynamics. One analyst remarked, “Fluctuations in the KRW-USD exchange rate, hovering near the 1440-level recently, coupled with auto sector volatility, point to investor caution surrounding tariff negotiations.”

While the Kospi showcased record highs, the KOSDAQ index also recorded notable gains, trading at 895.74 by late morning—a rise of 12.66 points (1.43%) from the prior session. The index had opened at 890.23, marking a 0.81% increase compared to Wednesday’s close at 883.08.

Retail investors dominated the KOSDAQ market, with net buying activity of KRW 783 billion. Conversely, foreign and institutional investors registered net sales of KRW 417 billion and KRW 313 billion, respectively. Sector leaders included general services with a remarkable 3.69% gain, alongside financials (2.74%) and pharmaceuticals (2.04%), while declines were seen in food and beverages (-0.14%), paper and wood (-0.40%), and publishing (-0.02%).

Q3 Earnings Drive Sentiment Amid Stabilized KRW/USD Dynamics

The Kospi’s historic 4000 level underscores a bullish market sentiment that has emerged alongside preemptive pricing of promising Q3 earnings across major sectors. An analyst noted, “The Kospi’s impressive rally, up by 16% this month, demonstrates a strong belief in better-than-expected financial results from domestic and international industry leaders. However, the local market’s tendency to experience volatility post-earnings releases could lead to short-term pullbacks.”

Notable KOSDAQ performers included Altenogen (3.70%), EcoPro (3.40%), EcoPro BM (2.26%), and Peptron (2.72%), signaling robust investor confidence in diversified sectors. Detractors included HLB (-0.44%) and PharmaResearch (-0.36%), highlighting pockets of weakness.

Meanwhile, in the Seoul foreign exchange market, the KRW/USD exchange rate stabilized at 1436.7 KRW per dollar, a marginal decrease of 0.4 KRW compared to the previous session’s close at 1437.1 KRW. This stabilization follows heightened volatility earlier in the month, providing some relief to exporters and other Korea-based global players dealing with currency pressures.

Key Markets Reflecting South Korea’s Resilience

The Kospi’s unprecedented leap, along with steady KOSDAQ gains, highlights South Korea’s growing significance in the global financial landscape amid an interconnected web of geopolitical and economic events. With optimism surrounding the U.S.-China and South Korea-U.S. summits, ongoing tariff negotiations, and clear signs of liquidity boosting corporate earnings, South Korea’s capital markets are poised to sustain their upward trajectory—a beacon of progress amid shifting global economic conditions.