South Korea's stock market boom draws a new generation of investors

Seoul, South Korea – When Kim Ha-young, an office worker in her 30s in Seoul, came into some unexpected cash last year after paying a deposit on her rented apartment, she did something she had never done before: buy stocks.

With limited market knowledge, Kim impulsively picked shares in SK Hynix and Samsung Electronics, the country’s two biggest memory-chip makers for AI. “I mean, when you think of South Korea, you think of Samsung, right?” Kim told Al Jazeera, explaining that she began investing “without any prior research.”

By September, her stocks began to climb. Initially, she told herself she would be content with a 50,000 won ($33) profit. But as SK Hynix and Samsung shares kept soaring, she traded in and out before deciding to hold in February. Since then, the value of Kim’s stakes in the two companies has more than doubled. “I’m in profit, so I’m telling myself to wait — it’s been rising well over the past six months,” Kim said.

Kim is among a growing number of South Koreans entering the stock market for the first time during the country’s most spectacular rally on record. The number of South Koreans owning stocks rose from about 6 million in 2019 to more than 14.5 million by the end of 2025, according to the Korea Securities Depository. That figure has likely surged in the past six months, as the benchmark Kospi nearly doubled, making it the best performer among major global indices. As of May, the number of active stock trading accounts stood at 105.22 million, up 6.93 million from the end of last year, according to the Korea Financial Investment Association.

This boom is a remarkable turnaround for a stock market long seen by investors as lagging behind others. Despite producing global giants like Samsung and Hyundai, South Korea for decades was known for its “Korea discount,” a term for the low valuation of local firms. “The same business would be priced lower here than in the global market,” said Jung Jiggwang, head of corporate finance at Woori Bank, speaking to Al Jazeera.

Market observers attributed the poor performance to weak corporate governance under the family-run conglomerate system and low shareholder returns. South Korean companies have long been notorious for disregarding minority investors, leading to a culture of short-term trading and unnecessary volatility.

President Lee Jae-myung, like his predecessors, has vowed to erase the image of South Korea as an underdeveloped investment destination and eliminate the “Korea discount.” During his election campaign last June, he pledged to lift the Kospi to 5,000 points — a milestone it crossed in January and has since far exceeded. A former day trader himself, Lee’s administration has pushed a series of stock market reforms, including allowing minority shareholders to pool their votes for preferred candidates when electing board members.

Lee expressed hope that more people would invest in the market, partly to reduce the country’s fixation on real estate, the traditional asset of Asia’s fourth-largest economy. That fixation has contributed to one of the world’s most expensive property markets, with the average 84-square-metre apartment in Seoul costing 2.14 billion won ($1.4 million). “Housing real estate has no specific productivity other than functioning as a home,” Jung said. “Whereas the purpose of a company is to create new technologies or services and increase added value.” He noted that with the economy facing weak growth due to an aging population, capital should be channeled into “good companies with high productivity.”

At a press conference marking his first year in office, Lee criticized controlling shareholders who had scared retail investors away even when companies were highly profitable, saying they would “go around the back, stick a pipe in, and suck it dry.” He said cleaning up those “irregularities” had helped push the market past 5,000 points.

While the Lee administration has rolled out a series of reforms to protect minority shareholder interests and lure new investment, the outsized rally has largely been driven by a global memory-chip shortage. AI demand for chips has delivered record profits to Samsung Electronics and SK Hynix, vaulting the firms into the ranks of companies with at least $1 trillion in market capitalization.

Kim Do-hyun, a 30-year-old working at an AI startup in Seoul, said faith in South Korean blue-chip stocks convinced him to enter the market because of the rally and optimistic earnings forecasts. “I just thought holding cash during this boom is wasteful,” Kim told Al Jazeera.

But the stunning rally has also come with volatility, raising concerns about its durability. On Monday, the Kospi fell nearly 9%, triggering a circuit breaker for the second time this year, after a record 12.06% drop in March. Jung said there was reason for cautious optimism over the long term, as the gains were concentrated in a handful of tech firms, while hundreds of profitable companies in other sectors were overlooked. The biggest risk, according to Jung, is that U.S. tech giants like Microsoft, Apple, and Amazon tighten spending faster than expected. “The cause of the decline could come from the same place as the cause of the rally,” he said.

Kim Ha-young is aware of the risk of getting carried away. Having experienced the thrill of seeing huge paper profits, she hopes to invest slowly and steadily for a down payment on a home or retirement savings. “I think the best thing is to invest in good companies over the long run,” she said. “I’m trying to let go of greed and just keep going without putting pressure on myself.”