Author: Zen, PANews
When it comes to crazy investing, South Koreans are serious. The historic surge in the South Korean stock market that began in the first half of last year proves this once again.
As of the end of February 2026, the Korea Composite Stock Price Index (KOSPI) has risen by nearly 50% this year, making it the best-performing stock market globally.
On February 25, the KOSPI broke through 6,000 points intraday for the first time; the following day, it closed above 6,300 points for the first time, recording gains in 10 of the past 11 trading days, continuously setting new historical highs. On February 28, Samsung Electronics' market capitalization surpassed the $1 trillion mark, becoming the first South Korean company to join the "trillion-dollar club."
As the founder of on-chain data analytics platform CryptoQuant said, "We Koreans love gambling; don't underestimate this country." Market reform: an indispensable catalyst. The rise of the South Korean stock market is the result of a series of government reforms and the resonance of global industrial dividends. On January 22, South Korean President Lee Jae-myung had lunch with members of the Democratic Party's "KOSPI 5000 Special Committee." Coincidentally, before lunch that day, the KOSPI index broke through the 5000-point mark for the first time in trading. Bringing South Korea into the "KOSPI 5000 era" was a grand vision that Lee Jae-myung repeatedly emphasized as a presidential candidate. Now, this vow has been fulfilled, and even more so. In less than a year, the South Korean stock market has surged from 2300 in April of last year to above 6200 currently. Perhaps even Lee Jae-myung didn't anticipate such a meteoric rise, accomplishing in a few months what other countries took years or even decades to achieve. This surge may be far from over, with strong upward momentum driving the KOSPI index to new highs. JPMorgan Chase and Nomura Securities have both recently raised their target levels for the KOSPI: JPMorgan predicts it will reach 7500 points this year, while Nomura expects it to reach 8000 points in the first half of 2026. The strong and frenzied performance of the South Korean stock market undoubtedly benefits from the global artificial intelligence boom. The "arms race" among tech giants in the AI field has continuously increased the prices and strategic importance of DRAM and NAND flash memory chips, as well as high-bandwidth memory (HBM). Against this backdrop, memory chip giant Samsung Electronics and SK Hynix, a major supplier of HBM to Nvidia, have both recorded gains exceeding 60%. If the fundamental demand from AI businesses provided support for the rise in the South Korean stock market, then the government-led stock market reforms were the catalyst that propelled the surge. The real structural change in the South Korean stock market is that the government has targeted the long-standing "Korea Discount" as a policy target. Through a comprehensive reform of corporate governance, shareholder returns, market systems, and trading infrastructure, South Korea aims to attract foreign investment and long-term capital willing to offer higher valuations. Since taking office last June, the Lee Jae-myung administration has pushed forward a more aggressive set of capital market reforms: Expanding the scope of fiduciary duty to strengthen board accountability for shareholders and capital efficiency; proposing adjustments to the dividend-related tax system to incentivize listed companies to increase dividends and improve shareholder returns; and simultaneously increasing enforcement resources and regulatory tools to strengthen the crackdown on insider trading, market manipulation, and other violations, while also announcing a roadmap for inclusion in the MSCI developed markets index. Before Lee Jae-myung took office as president of the Blue House, South Korea had already initiated reforms to its trading system in March of last year. The country launched its first alternative trading system, Nextrade (NXT), extending stock trading hours to 8:00–20:00 (including pre-market and after-market), attracting participants with lower fees and longer trading hours. Simultaneously, South Korea ended its longest-ever short-selling ban, emphasizing systemic reforms and stricter enforcement to improve market transparency and price discovery efficiency—a significant advantage for foreign investors who value "predictable market rules." Taking these factors together, the rise of the South Korean stock market is not only driven by the rise of AI, but also by a series of policy reforms that have been strategically implemented. To some extent, industry narratives are responsible for raising profit expectations, while institutional reforms are responsible for raising valuation ceilings. Therefore, KOSPI's rise is not simply a stock market rally driven by the AI theme; the South Korean government is also playing a significant role in guiding institutional reforms and value reassessment. The Slow Progress of South Korea's Crypto Policy Compared to the whirlwind of the stock market, the new crypto policy appears more cautious, even somewhat sluggish. As an extension of the "Korea discount" and capital market repricing plan, South Korea's management approach to the crypto industry is also changing. It has shifted from early passive regulation focused on combating fraud and anti-money laundering (AML) to a capital market logic that systematically protects users, regulates the market, and promotes institutionalization. At the exchange and market order level, the Virtual Asset User Protection Act, which came into effect in July 2024, explicitly requires virtual asset service providers to securely safeguard user deposits and virtual assets, establish stricter custody and management obligations, and establish a legal basis for punishing "unfair transactions" such as insider trading and price manipulation. To some extent, this aligns with the direction of "improving transparency and accountability" in its stock market reforms. Last year, the South Korean Financial Services Commission (FSC), in a policy briefing to the National Policy Planning Committee, clearly stated its intention to formulate a plan to introduce virtual asset spot ETFs and to promote a regulatory framework for stablecoins. This reform in the South Korean cryptocurrency industry does not imply a full embrace of crypto assets in the short term. On the contrary, it is characterized by tiered opening, cautious progress, and even a slightly slow pace. In February 2025, the FSC released a regulatory roadmap, planning to allow approximately 3,500 listed companies and licensed investors to trade virtual assets starting in the second half of last year. However, according to the Seoul Economic Daily, the draft of the "Guidelines for Virtual Asset Trading by Listed Companies" only entered the external communication and finalization process in January of this year, and its official effective date can only be set for the more general period within this year. This time lag between announcement and implementation reflects the slow pace of South Korea's gradual regulatory progress and implementation. Regarding cryptocurrency ETFs, South Korea's attitude has historically been conservative. In January 2024, after the US approved a Bitcoin spot ETF, South Korean financial authorities stated that they would not assess the necessity of following suit in the short term. However, in the past year or so, South Korea has shifted from principled rejection to acceptance. The South Korean government's 2026 economic growth strategy proposes to establish a comprehensive regulatory structure covering issuance, circulation, and trading through the "Digital Asset Basic Law," and plans to introduce digital asset spot ETFs, while also establishing a stablecoin regulatory framework. Discussions about Korean won stablecoins have been very heated in the past six months. However, official institutions have consistently emphasized caution, and no results have been reached to date. The biggest challenge currently facing regulators is the debate over the issuers of stablecoins. The banking sector, represented by the Bank of Korea, has consistently emphasized that without bank participation, KYC/AML may not be effectively implemented, potentially impacting South Korea's capital market openness and financial stability. While policy direction has become more flexible and the legislative framework continues to be developed, the issue of regulatory and participating entities remains unresolved, which accurately reflects the current state of the South Korean cryptocurrency market. Overall, South Korea employs a similar regulatory engineering path in both the capital market and crypto assets: first, solidifying the boundaries of responsibility, disclosure, and enforcement tools, and then expanding participants and capital volume through phased access and productization tools. Since the middle of last year, as South Korean investors flooded into the country's stock market, mainstream media and social media have frequently portrayed a pessimistic sentiment that "South Koreans are no longer trading cryptocurrencies." Data released by the FSC partially confirms these reports and claims—in the first half of 2025, the average daily trading volume of South Korea's five major exchanges was approximately 6.4 trillion won, a decrease of about 12% compared to the previous period; according to data submitted by the Financial Supervisory Service to the National Assembly, the total trading volume of South Korean crypto exchanges fell by about 11% last year. This indicates that the activity level of the South Korean crypto market has indeed declined. However, the situation is actually more complex when compared to global trading volume. The global cryptocurrency market is currently in a downturn, and the shrinking market is not limited to South Korea. On the contrary, against the backdrop of a global crypto winter, the resilience of the South Korean market remains remarkable. According to CryptoQuant data, after peaking in the fourth quarter of 2024, South Korea's share of the global crypto market has remained relatively stable between 8% and 11% since 2025. In recent months, amidst negative sentiment and liquidity shortages, the country's market share has surprisingly even slightly rebounded. Another indicator of resilience is the continued expansion of the South Korean cryptocurrency user base. An FSS report shows that the number of cryptocurrency trading users in South Korea increased from 8.91 million in 2024 to 9.91 million last year. Even with a decline in total market trading volume, the number of participants and market penetration are still increasing, indicating that the country's market foundation remains solid. The stock market and the cryptocurrency market have never been a zero-sum game. In South Korea, whether it's KOSPI breaking the 6000-point mark or the millions of cryptocurrency investors, what they reflect is the same social psychology: in a highly competitive society with increasingly solidified social classes, ordinary people have an extreme desire to break down barriers and achieve wealth leaps. The "discount in South Korea" eliminates undervalued areas in the capital market, while the tireless investment frenzy of South Koreans aims to eliminate the "discount" in the fate of ordinary people. As the stock market boom is being realized, nearly ten million South Koreans who still hold high hopes for the crypto market may be patiently waiting for another "KOSPI 5000 era" for cryptocurrencies.
Jasper
Clement
Alex
Hui Xin
Catherine
Jixu