KOSPI Closes Above 7,300 as Chip Stocks Lead Rally; Government, Elections and Fund Updates

South Korea’s benchmark KOSPI has pushed past the 7,000 mark, extending a record run after clearing 6,000 about two months earlier. Compared with a year ago, the index has nearly tripled, prompting talk that the market has entered a “new normal.” Brokerage research chiefs said the momentum could even carry the index above 9,000. <Related story, pages 3 and 10>
  
The Korea Exchange said the KOSPI closed Tuesday at 7,384.56, up 447.57 points, or 6.45%, from the previous session. It climbed toward 7,500 intraday. The index stood at 2,573.80 on May 7 last year, meaning it has risen about 187% in a year.
 
Semiconductors led the surge, as expectations for improved earnings at major chipmakers and upward revisions to profit forecasts lifted sentiment across the supply chain. Samsung Electronics closed at 266,000 won, up 33,500 won, or 14.41%. Its market capitalization reached about 1,555 trillion won, entering the “$1 trillion market cap club” for the first time. It is the second in Asia after Taiwan’s TSMC and ranks 12th globally by market value, according to Bloomberg data. SK hynix rose 10.64% to 1,601,000 won, with a market cap of 1,141 trillion won.
 
Deputy Prime Minister Koo Yun-cheol, who also serves as minister of economy and finance, said the government will stick to its 2% growth target for this year despite the prolonged war in the Middle East. His remarks came as concerns grow that Middle East-driven inflation could intensify while downside risks to the economy increase.

Koo spoke to reporters on May 5 local time after attending the Asian Development Bank’s annual meeting and the ASEAN+3 finance ministers and central bank governors meeting in Samarkand, Uzbekistan.

“Because the Middle East situation is highly volatile, it is practically difficult to forecast growth, and the impact is significant,” Koo said. “But I want to say we will achieve the 2% (growth) we promised.” He added that “investment banks’ forecasts are much higher than 2%,” and said he would “work closely on policy with the new governor” and do his best to meet the target.
 
Political sparring is intensifying over key battlegrounds ahead of the June 3 local elections. The Democratic Party nominated Jung Won-oh, the former Seongdong District mayor, for Seoul mayor and nominated Jeon Jae-soo, the former oceans and fisheries minister, for Busan mayor, seeking to highlight an image of “mayors who get things done.” The People Power Party is focusing on consolidating conservative voters, citing incumbency advantages and a special-prosecutor issue tied to canceled indictments.
 
Park Sung-joon of the Democratic Party, Kim Jae-seop of the People Power Party, Shin Jang-sik of the Rebuilding Korea Party and Chun Ha-ram of the New Reform Party appeared Tuesday on CBS Radio’s “Park Sung-tae’s News Show,” trading arguments over hotly contested districts in the June 3 local and by-elections.
 
Kim offered a sharp assessment of Democratic Party Seoul candidate Jung. “It’s not that conservative supporters are uniting; it’s that Jung’s approval is falling, narrowing the polling gap,” Kim said. “I think his view of Seoul is that of a beginner, an amateur.” He added, “Once he’s put to the test, the bubble around ‘he works well’ is deflating,” and said that with the indictment-cancellation issue overlapping, “the Democratic Party will have a very difficult time in the Seoul race.”
 
A retail-focused National Growth Fund, promoted with what officials call unprecedented benefits including tax support and loss support, is set to go on sale in earnest later this month. With incentives strengthened to address shortcomings of earlier policy funds such as the New Deal fund, the key question will be whether it draws real inflows and delivers results.

The Financial Services Commission said Tuesday that the fund will be sold for three weeks from the 22nd through the 11th of next month through 25 banks and securities firms, both at branches and online. Total retail sales will be 600 billion won, offered on a first-come, first-served basis until the allocation is exhausted. The annual subscription limit is 100 million won per person. Minimum subscriptions vary by seller, ranging from 0 to 1 million won. Investors cannot redeem early during the five-year term, the commission said, urging caution.

The fund’s main feature is tax benefits, including income deductions. For investments up to 30 million won, the deduction rate is 40%; for amounts over 30 million won up to 50 million won, 20%; and for amounts over 50 million won up to 70 million won, 10% — for a maximum income deduction of 18 million won. Dividend income is taxed separately at 9% if held for five years.
 
South Korea posted its largest-ever first-quarter exports, helped by an artificial intelligence boom and a recovery in the semiconductor cycle. But the surge also deepened concerns about overreliance on a narrow set of items, especially memory chips, raising questions about the stability of the export structure.

The Ministry of Trade, Industry and Energy said Tuesday that first-quarter exports rose 37.8% from a year earlier to $219.9 billion, the highest for the period. The ministry cited expanded investment in AI servers and strong semiconductor conditions as factors boosting competitiveness.

The concentration risk remains, officials said. First-quarter semiconductor exports rose 139% from a year earlier to $78.5 billion.