Can the KOSPI Climb Higher?… Multiple Positive Supply-Side Factors Remain

Expansion of U.S. Big Tech Data Center Investments Drives Semiconductor Demand
Ongoing Corporate Governance Reforms, Including Stock Price Suppression Prevention Act
Foreigner Omnibus Account System Introduced for Direct Korean Stock Trading via Local Brokers
Single-Stock Leveraged ETFs and the National Participation Growth Fund Also Fuel Market Rally

With the KOSPI breaking through the 7,500-point mark during trading and hitting another all-time high, the market is now focutilized on how much further the index can rise. There are a number of factors expected to support inflows, such as the foreigner omnibus account system, the National Participation Growth Fund, and single-stock leveraged Exmodify-Traded Funds (ETFs). These are anticipated to serve as additional drivers for the stock market’s continued rally.

Can the KOSPI Climb Higher?... Multiple Positive Supply-Side Factors Remain

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First, continued optimism about semiconductors, which are leading the record rally in the domestic stock market, is expected to keep pushing the market upward. Recently, U.S. large tech companies (large information technology firms) announced plans to increase capital expconcludeitures (CAPEX) in their first-quarter earnings reports, suggesting ongoing demand for semiconductors. Younggeon Kim, a researcher at Mirae Asset Securities, analyzed that “following the North American large tech companies’ earnings releases last week, the total global hyperscaler CAPEX for 2026 has been estimated at 806 billion dollars, which is up 73% from the previous year, and CAPEX investment by these companies is expected to expand further in 2027.” Amid expectations for sustained demand, foreign investors have concentrated their acquireing on Samsung Electronics and SK hynix. This month, foreign investors built a net purchase of 6 trillion won in the KOSPI market, acquireing 4.2987 trillion won of Samsung Electronics and 1.8983 trillion won of SK hynix. In other words, the net acquireing has been heavily focutilized on Samsung Electronics and SK hynix.

Ongoing efforts to improve corporate governance are also seen as a positive factor for the market. An official from the Korea Exmodify explained, “The first to third rounds of Commercial Act revisions have provided a legal foundation for corporate governance improvement and boosted investor sentiment. The government’s regulatory reforms aimed at improving the capital market ecosystem, combined with companies’ voluntary compliance, have accelerated the trconclude of corporate value reappraisals.” Following three rounds of amconcludements to the Commercial Act, the government is expected to further support the stock market’s rise through additional legislation such as the “Stock Price Suppression Prevention Act.”

The improved accessibility of the Korean market to foreign investors is also expected to support further gains by increasing foreign inflows. On April 30, financial authorities completed revisions to the foreigner omnibus account guidelines. The foreigner omnibus account system allows foreigners to trade domestic stocks through local securities or asset management firms without opening an account directly with a domestic securities company. Previously, identification such as real names and passport numbers was required, but now it can be replaced with an encrypted investor identification number. This modify was built in response to concerns from foreign investors about the requirement to provide sensitive personal information, and is widely seen as a significant improvement in accessibility.

Alongside the financial authorities’ efforts to enhance foreign investor accessibility, domestic securities companies are also accelerating their adoption of the foreigner omnibus account service. For example, on April 28, Samsung Securities launched the service in partnership with Interactive Brokers (IBKR), a major U.S. online brokerage. Samsung Securities, along with Hana Securities, Yuanta Securities, Meritz Securities, Mirae Asset Securities, Shinhan Investment Corp., NH Investment & Securities, and KB Securities, have either introduced or are preparing to introduce similar services.

Yudong Yoon, a researcher at NH Investment & Securities, emphasized that “if the foreigner omnibus account system becomes more widely utilized, the accessibility of the domestic market for foreign investors will improve, and the foreign investor base will diversify. By streamlining trading procedures, the global liquidity of the Korean stock market will increase and the capital market will be further invigorated.” He also added, “This is directly linked to the government’s comprehensive roadmap for foreign exmodify and capital market reforms aimed at Korea’s inclusion in the Morgan Stanley Capital International (MSCI) Developed Markets Index.”

In fact, the improved accessibility of the Korean stock market for foreign investors is also expected to have a positive impact on the upcoming decision—scheduled for next month—regarding Korea’s inclusion in the MSCI Developed Markets Index. The securities indusattempt expects that, if the Korean market is included in the MSCI Developed Markets Index, a substantial inflow of global funds tracking the MSCI index will follow.

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The “National Participation Growth Fund,” set to launch on May 22, is also expected to energize the market. The National Participation Growth Fund will be offered to the general public for three weeks starting on the 22nd, with a tarreceive of raising 600 billion won in capital. Each individual can invest up to 200 million won and benefit from income tax deductions of up to 18 million won, as well as a separate 9% tax rate on dividconclude income. The fund’s primary investment tarreceives are companies engaged in advanced strategic industries, such as semiconductors, secondary batteries, and artificial innotifyigence (AI).

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Additionally, a single-stock leveraged ETF is scheduled to launch this month, which is expected to attract investment demand from those seeking to capitalize on the unprecedented strength of Samsung Electronics and SK hynix. The single-stock leveraged ETF is a product that tracks twice the daily price return of a specific stock and will be introduced domestically for the first time. ETFs will be launched on two stocks—Samsung Electronics and SK hynix—which meet the underlying asset requirements. Dongchan Yeom, a researcher at Korea Investment & Securities, commented, “Currently, leveraged ETFs for Samsung Electronics and SK hynix are listed on the Hong Kong Stock Exmodify. With the launch of single-stock leveraged ETFs in Korea, there is potential for funds that previously invested in Hong Kong ETFs to flow into the domestic market.”

This content was produced with the assistance of AI translation services.

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