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South Korea’s Equity Rally Shines in 2025, but New Risks Loom Ahead
South Korea outperformed global peers in 2025 on the back of tech-led earnings recovery and reforms, but stretched valuations, slowing global growth, and geopolitical uncertainties may test market resilience in 2026.
South Korea emerged as a top-performing equity market in 2025, driven by a rebound in semiconductor demand, strong export recovery, and supportive policy measures. Heavyweight technology stocks and improving corporate governance reforms attracted global capital flows. However, analysts warn that 2026 could be more challenging as valuations rise, global growth moderates, and geopolitical and currency risks resurface, potentially tempering investor enthusiasm.