Seoul, South Korea – The South Korean stock market experienced a robust surge on June 4, 2025, the first trading day after the 21st presidential election, with the KOSPI index climbing nearly 3%. This significant uptick reflects strong market optimism surrounding the inauguration of the new administration.

According to the Korea Exchange (KRX), the KOSPI closed at 2,770.84, a substantial increase of 71.87 points (2.66%) from the previous trading day. The index opened higher at 2,737.92, up 38.95 points (1.44%), and steadily broadened its gains throughout the day, quickly pushing past the 2,770 threshold. The intraday high reached 2,771.03, setting a new yearly high for the benchmark index.

This marks the first time the KOSPI has closed above the 2,770 level in approximately 10 months, last achieving this on August 1, 2024, when it closed at 2,777.68. The surge signals a newfound confidence in the market, largely attributed to the resolution of political uncertainties that had lingered since the declaration of martial law in December of the previous year.

Foreign Capital Inflows and Policy Expectations Fuel Rally

A key driver of this market rally was the significant inflow of foreign capital into the KOSPI. Foreign investors net-purchased a substantial 1.05 trillion won (approximately $760 million USD) in the KOSPI, marking their first net purchase exceeding 1 trillion won since August 16, 2024 (1.25 trillion won). Furthermore, foreign investors also net-purchased 797.1 billion won in KOSPI 200 futures, bringing their total combined net buying in spot and futures markets to an impressive 1.85 trillion won. This represents the largest foreign capital inflow in 11 months, since July 5, 2024 (2.27 trillion won). Institutional investors also contributed to the buying spree, net-purchasing 204.5 billion won, while individual investors net-sold 1.23 trillion won, opting to realize profits.

Market analysts widely interpret the surge as a strong reflection of high expectations for the new government's policy initiatives, particularly those aimed at economic revitalization and capital market reforms. The conclusion of domestic political instability following the presidential election is seen as a major factor in restoring investor confidence.

Sectoral Gains: Holding Companies, Financials, and Tech Lead the Charge

A significant catalyst for the market's ascent was the emphasis placed on the new government's commitment to legislative reforms. President Lee Jae-myung's pre-election pledge to process the Commercial Act amendment bill within two to three weeks of his inauguration particularly resonated with investors. This promise propelled the stock prices of holding companies, which stand to benefit from potential governance improvements and shareholder-friendly policies. Notable increases were seen in Hanwha (20.98%), SK Square (13.06%), CJ (12.19%), and Doosan (11.00%).

Expectations for capital market activation policies, including President Lee's ambitious "KOSPI 5,000" pledge, fueled a strong rally in financial sector stocks. Securities firms experienced significant gains, with Boogook Securities (22.67%), Mirae Asset Securities (13.25%), Shinyoung Securities (12.62%), SK Securities (11.34%), and Hanwha Investment & Securities (9.61%) leading the pack. Insurance companies also performed strongly, including Mirae Asset Life Insurance (11.42%), Samsung Fire & Marine Insurance (9.66%), and Samsung Life Insurance (8.91%). Additionally, major financial holding groups saw substantial foreign and institutional buying, with KB Financial Group (7.90%), Shinhan Financial Group (7.35%), Hana Financial Group (6.43%), and Meritz Financial Group (2.34%) all posting solid gains.

Beyond financials, other sectors benefiting from policy expectations included new and renewable energy stocks like Hanwha Solutions (5.69%) and OCI Holdings (6.85%), as well as consumer stocks such as Samyang Foods (4.44%) and KT&G (3.15%), on anticipation of supportive policies. The global strength in semiconductor technology stocks, coupled with domestic expectations for artificial intelligence (AI) policies, also boosted semiconductor stocks. SK Hynix (4.82%) and Samsung Electronics (1.76%) were among the major contributors to the KOSPI's rise.

The Downside: "Theme Stocks" Suffer as Hopes Fade

Conversely, stocks previously categorized as "Lee Jae-myung theme stocks," such as Eastarco (-15.78%) and Orient Bio (-13.60%), experienced sharp declines as the "material" or speculation surrounding them dissipated post-election. Similarly, "Kim Moon-soo theme stock" Peace Holdings (-12.80%) also saw a significant drop. Among the top market capitalization stocks, Kakao (-3.59%), Korea Electric Power Corporation (-1.50%), and Hanwha Ocean (-1.29%) also closed lower.

Sector-wise, securities (8.14%), insurance (8.03%), finance (6.46%), non-metals (4.02%), retail (3.02%), machinery (3.19%), chemicals (3.15%), food and beverages (2.94%), and construction (2.87%) all registered significant gains. However, some sectors, including electricity and gas (-0.57%) and IT services (-0.37%), showed weakness.

KOSDAQ Also Rises, Biotech Sector Sees Mixed Results
The KOSDAQ index also closed higher, gaining 9.92 points (1.34%) to finish at 750.21. The index opened at 749.13, up 8.84 points (1.19%), and maintained its strong performance throughout the trading day. This marks the first time the KOSDAQ has closed above 750 since February 27, 2025 (770.85), roughly three months ago.

In the KOSDAQ market, foreign investors net-purchased 148.3 billion won, and institutional investors net-purchased 175.3 billion won, while individual investors net-sold 304.5 billion won.

Among the top market capitalization stocks on KOSDAQ, Alteogen (8.86%), the largest by market cap, surged on news of a potential patent cancellation for a competitor. Other gainers included Rainbow Robotics (6.32%), Leeno Industrial (7.39%), and Caregen (7.76%). Battery material stocks like EcoPro BM (3.30%) and EcoPro (3.80%) also showed strength.

Conversely, the biotechnology sector experienced mixed results. Peptron hit its daily limit down (-30.00%) following news that its key partner, Eli Lilly, had signed a technology transfer agreement with another company. Other pharmaceutical stocks, including ABL Bio (-5.33%), HLB (-2.84%), and LegoChem Biosciences (-2.70%), also saw simultaneous declines.

Total trading value on the KOSPI and KOSDAQ markets reached 12.09 trillion won and 6.73 trillion won, respectively. These figures represent a significant increase of approximately 4 trillion won and 1 trillion won, respectively, compared to June 2, the day before the presidential election. Trading volume on the alternative trading system (ATS), Nextrade's pre- and regular markets, amounted to 6.47 trillion won.

 
This comprehensive report highlights the immediate positive reaction of the South Korean stock market to the conclusion of the presidential election and the anticipation of new government policies. The significant influx of foreign capital underscores growing international confidence in the South Korean economy under the new leadership.

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