Consumers shift from shoes to shares as Kospi bull run sets off race for gains

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Consumers shift from shoes to shares as Kospi bull run sets off race for gains

Published: 23 Apr. 2026, 07:00

Audio report: written by reporters, read by AI

Woori Bank traders in central Seoul celebrate as the Kospi closes at a record high of 6,388.47 on April 21. [YONHAP]

The first app that a young office worker surnamed Jeon opens these days is no longer a shopping platform, but a brokerage account.

Although he used to spend up to 400,000 won ($270) a month on clothes, he now hesitates before making even small purchases.

“I used to buy clothes as soon as the seasons changed,” he said. “Now I think, ‘I could buy at least one more share with that money.’”

The shift reflects a broader change taking hold across Korea as the benchmark Kospi extends a record rally. Instead of the classic “wealth effect,” where an increase in the value of assets boosts consumption, economists say a reverse dynamic is emerging: Households are cutting spending to funnel more money into the stock market.

In some cases, stocks themselves are being treated like consumer goods.

A working mother of three surnamed Son has set the 17th of each month as her “stock-buying day.”

“I don’t really feel like buying accessories, shoes or bags these days,” she said. “But I really want to buy stocks. It gives me the same kind of dopamine rush as shopping.”

She said she plans to keep putting money into index funds, betting that the market has further to rise.

The Bank of Korea (BOK) has taken note. In a February outlook, the central bank warned that the recent stock market boom could have a short-term impact on consumption, as households prioritize investing over spending.

The bank estimates that the marginal propensity to consume when it comes to financial assets — including stocks, bonds and funds — is just 1 percent.

That means a 10 million won increase in such assets translates into only about 100,000 won in additional consumption.

A key factor is what economists describe as the opportunity cost of spending. With expectations of further gains running high, households may be reluctant to spend cash they see as potential investment capital.

Market volatility is also playing a role. Even when investors book gains, they tend to view them as temporary rather than permanent income, making them less likely to increase spending.

Consumer sentiment reflects that caution. The consumer sentiment index fell to 107 in March amid market swings tied to conflict in the Middle East, down 5.1 points from a month earlier, marking the sharpest drop since December 2024.

Cutbacks on consumption in favor of investment is particularly pronounced among younger Koreans.

One interviewee in her late 20s surnamed Lee told the JoongAng Ilbo that she recently embarked on a “no spending” challenge ahead of her marriage next year. The resulting savings go directly into ETFs.

“With tighter lending rules, investing feels like the only way to save enough money to buy a home,” she said.

Economists say the pattern tends to be strongest among those in straitened financial circumstances or people who are aggressively pursuing asset gains.

A similar phenomenon has surfaced in Japan, where the expansion of tax-advantaged investment accounts under the Nippon Individual Savings Account program has fueled a surge in retail investing — and, in some cases, a squeeze on everyday spending among younger households.

But even as the Korean stock market booms, those who benefit most are wealthier households, who tend to save or reinvest rather than spend.

The BOK estimates that the marginal propensity to consume among the top 20 percent of earners is just 0.8 percent, below the overall average.

As such, their gains are less likely to translate into higher consumption.

Analysts added that rising inflation also serves to depress spending.

“Even when people make money from stocks, rising prices have made consumption itself feel wasteful,” said Kim Sang-bong, a professor of economics at Hansung University, adding that stabilizing inflation is key to reviving domestic demand.

Others caution that the strategy carries risks.

“Cutting current consumption is a choice to increase future consumption,” said Suk Byung-hoon, an economics professor at Ewha Womans University. “But given the high volatility in the stock market, there’s a need for caution. Overconcentration in equities could ultimately lower overall returns.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY JANG SEO-YUN [[email protected]]