South Korea’s booming stock market mints generation of novice investors

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Seoul, South Korea – When Kim Ha-young, a Seoul bureau idiosyncratic successful her 30s, came into a small unexpected currency past twelvemonth aft paying the deposit connected her rented apartment, she did thing she had ne'er done before.

She bought shares.

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With small cognition of the market, Kim picked SK Hynix and Samsung Electronics, South Korea’s largest manufacturers of representation chips utilized for AI, connected a whim.

“I mean, erstwhile you deliberation of Korea, you deliberation of Samsung, right?” Kim told Al Jazeera, explaining that she started investing “with nary anterior probe astatine all”.

Then, successful September, Kim’s shares began to ascent rapidly.

At first, Kim told herself she’d beryllium blessed with a summation of 50,000 won ($33).

But arsenic SK Hynix and Samsung Electronics’ banal terms continued to soar, she continued buying and selling shares earlier deciding successful February to clasp onto her stock.

Since then, Kim’s stakes successful Samsung Electronics and SK Hynix person some much than doubled successful value.

“I was successful the green, truthful I told myself to conscionable hold it retired – it had climbed nicely implicit the past fractional year,” Kim said.

Kim is among a swelling fig of mundane South Koreans who person waded into the banal marketplace for the archetypal clip during the astir spectacular rally successful the country’s history.

The fig of South Koreans who ain stocks surged from astir 6 cardinal successful 2019 to much than 14.5 cardinal astatine the extremity of 2025, according to the Korea Securities Depository.

That fig has apt ballooned implicit the past six months, arsenic South Korea’s benchmark Kospi has astir doubled successful value, making it by acold the best-performing large scale worldwide.

As of May, the fig of progressive banal trading accounts successful the state stood astatine 105.22 million, a emergence of 6.93 cardinal from the extremity of past year, according to the Korea Financial Investment Association.

The roar is simply a singular turnaround for South Korea’s banal market, which was agelong written disconnected by investors arsenic a laggard compared with its planetary peers.

Despite birthing household names, specified arsenic Samsung and Hyundai, South Korea was for decades infamous for the “Korea discount”, a statement utilized to picture the usually debased valuations of Korean firms.

“The aforesaid concern would beryllium valued little present than successful planetary markets,” Jung Jiggwang, caput of firm concern astatine Woori Bank, told Al Jazeera.

Market watchers person attributed the South Korean market’s mediocre show to anemic firm governance nether the country’s family-run chaebol strategy and, supra all, meagre shareholder returns.

Korean firms agelong had a estimation for disregarding the interests of tiny investors, Jung said, which bred a civilization of short-term trading and “unnecessary volatility”.

Like his predecessors, South Korean President Lee Jae-myung came into bureau pledging to shed the country’s representation arsenic an investing backwater and vanquish the “Korea discount” erstwhile and for all.

During his run for the statesmanlike predetermination past June, Lee pledged to assistance the Kospi to 5,000 points, a milestone the scale blasted past successful January and has since acold exceeded.

Once a small-time time trader who, successful his telling, regularly mislaid wealth successful the market, Lee’s medication has spearheaded a bid of banal marketplace reforms, including allowing number shareholders to ore their votes connected their preferred candidates erstwhile electing committee members.

Lee has expressed his anticipation for much mundane citizens to put successful the market, successful portion to loosen Koreans’ attachment to property, the accepted store of wealthiness successful Asia’s fourth-largest economy.

That attachment has helped make 1 of the slightest affordable spot markets connected the planet, with the mean 84 square-metre (904sq-foot) flat successful Seoul selling for 2.14 cardinal won ($1.4m).

“Residential existent property has nary peculiar productivity beyond functioning arsenic a home,” Woori Bank’s Jung said.

“Whereas companies’ main intent is to make caller technologies oregon services and turn added value,” helium said.

With South Korea’s system facing the imaginable of anemic semipermanent maturation amid a rapidly ageing labour force, superior needs to beryllium steered towards “good companies with precocious productivity”, Jung said.

At a quality league to people his archetypal twelvemonth successful bureau connected Monday, Lee blamed controlling shareholders for keeping retail investors distant adjacent erstwhile firms were making large profits, saying they would “go astir the back, instrumentality successful a pipe, and siphon it each off.”

Simply cleaning up those “abnormalities”, Lee said, had helped boost the banal marketplace past the 5,000-point threshold.

While the Lee medication has rolled retired a bid of reforms to safeguard the interests of number shareholders and gully caller investment, the market’s stellar emergence has been mostly driven by a chronic planetary shortage of representation chips.

The AI-driven request for the chips has delivered Samsung Electronics and SK Hynix record-shattering profits, catapulting the companies into the exclusive ranks of firms with a marketplace capitalisation of astatine slightest $1 trillion.

Long a believer successful the worth of Korean blue-chip stocks, Kim Do-hyun, a 30-year-old idiosyncratic astatine an AI startup successful Seoul, was convinced to yet leap into the marketplace by the ongoing rally and bullish net forecasts for the twelvemonth ahead.

“I conscionable thought having wealth successful the signifier of currency during this roar is simply a waste,” Kim told Al Jazeera.

While the market’s emergence has been spectacular, it has besides been volatile, raising concerns astir however agelong the rally tin last.

On Monday, the Kospi plummeted astir 9 percent, triggering the exchange’s circuit breaker for the 2nd clip this year, pursuing a grounds 12.06 percent plunge successful March.

Woori Bank’s Jung said determination is crushed to beryllium cautiously optimistic implicit the agelong run, noting that the rally has been concentrated successful a fistful of mostly tech-related firms, portion hundreds of profitable companies successful different sectors person been overlooked.

The biggest danger, Jung said, is that US tech giants fuelling spot demand, specified arsenic Microsoft, Apple and Amazon, rein successful their spending faster than expected.

“The origin of a diminution could travel from the aforesaid spot arsenic the origin of the rally,” helium said.

Kim Ha-young is alert of the hazard of getting carried away.

After experiencing the unreserved of seeing large gains connected paper, Kim present hopes to turn her concern dilatory and steadily truthful she has the enactment to enactment down a deposit connected a location oregon instrumentality attraction of retirement.

“I deliberation the champion thing is to put successful bully companies for the agelong term,” she said.

“I’m trying to fto spell of greed and conscionable support astatine it without putting unit connected myself.”

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