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Kospi surges to all-time high on optimism on capital gains tax hike walk-back

Published: 10 Sep. 2025, 18:54 Updated: 10 Sep. 2025, 19:22

JIN MIN-JI
[email protected]

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing on Sept. 10. [NEWS1]

The Kospi surged to an all-time high on Wednesday, extending its winning streak to seven consecutive sessions, boosted by investor hopes for a reversal of a controversial capital gains tax hike proposal.

The benchmark index closed at 3,314.53, up 1.67 percent, the highest since it reached 3,305.2 in July 2021. The bourse also briefly surged to 3,317.77 during intraday trading, breaking the previous record high of 3,316.08 set in June 2021.

Wednesday’s rally was led by foreign and institutional investors, who net purchased 1.38 trillion won ($993 million) and 904.44 billion won worth of shares, respectively, while retail investors sold a net 2.25 trillion won.

Optimism grew ahead of President Lee Jae Myung's possible withdrawal of a proposal to lower the capital gains tax threshold for stock investments, which he is expected to outline during a press conference on Thursday marking the 100th day since his inauguration.

The Kospi snapped a four-month rally last month after investors felt disappointed by a government proposal to lower the capital gains tax threshold on stock holdings from 5 billion won to 1 billion won. The strong backlash prompted the government and the Democratic Party to re-evaluate the scheme.

Major winners on Wednesday included SK hynix, which closed up 5.56 percent, and Samsung Electronics, which surged 1.54 percent.

Battery maker LG Energy Solution shed 1.87 percent, while Hyundai Motor rose 0.68 percent.

Bio shares ended mixed as Samsung Biologics fell 0.67 percent while Celltrion inched up 0.12 percent.

“A strong performance in the U.S. stock market and expectations for eased major shareholder regulations have acted as driving forces, extending the rally,” wrote Kim Jin-won, an analyst at KB Securities, in a report on the day.

The Dow Jones Industrial Average rose 0.43 percent, and the tech-heavy Nasdaq composite climbed 0.37 percent. The S&P 500 index inched up 0.27 percent, as a weaker-than-expected jobs report raised expectations for rate cuts.

“Amid expectations of the start of a rate-cut cycle and with additional positive domestic policy factors, the Korean stock market saw an expanded rise, driven by concentrated buying in large-cap stocks.”

The Kospi, which opened at 100 points in 1980, broke the 1,000 threshold in March 1989 on the back of low oil prices, interest rates and weak exchange rates. The index reached 2,000 in July 2007 on rapid economic growth in key industries and the popularity of investment funds.

In the 2010s, the index largely hovered between 1,800 and 2,200 points, but shot up to surpass 3,000 in January 2021 as the market rallied following the unleashing of mass liquidity to revive an economy hit hard by the Covid-19 pandemic.

Though the index tumbled amid a political vacuum in the first half of the year, following the ouster of former President Yoon Suk Yeol over his declaration of martial law in December of last year, it started to pick up under the Lee Jae Myung administration, with the president vowing to push up the Kospi to a whopping 5,000 points.

“Today’s record high carries the symbolic meaning of overcoming the Korea discount,” said Jeong Eun Bo, the Korea Exchange Chairman and CEO, in a statement, referring to a phenomenon resulting in the undervaluation of local stocks.

Jeong vowed that the exchange will continuously encourage listed companies to enhance shareholder value and strengthen market surveillance against unfair trading, and that it will steadily prepare innovations in trading infrastructure, such as 24-hour trading and shorter settlement cycles.

The secondary Kosdaq closed up 0.99 percent at 833 while the local currency was quoted at 1,387.2 won against the greenback at 3:30 p.m., up 0.7 won from the previous session.

BY JIN MIN-JI [[email protected]]