Right now, South Korea’s financial market is just as red-hot as the U.S. market.
Thanks to President Lee Jae-myung’s aggressive pro-shareholder policies and radical tax incentives, retail capital has flooded into the market. This liquidity has pushed us to a historic milestone: breaking the 4,500 point barrier on the KOSPI.
The ETF craze that kicked off in 2025 has been nothing short of phenomenal. Even friends of mine who used to despise stocks are now glued to YouTube, figuring out which ETFs to buy and opening brokerage accounts. You can even see stock brokerage ads at bus stops now—a scene that would have been unimaginable just a few years ago.
**However, there is a critical shadow looming over this rally.**
The index may have breached **4,500**, but if you look closer, only two stocks are truly shining: Samsung Electronics and SK Hynix. The daily fluctuation of the entire index is essentially dictated by these two giants.
While the market is awash with cash, that liquidity isn't trickling down to small and mid-cap stocks. Neglected sectors are still crawling along the bottom. It’s a textbook case of extreme market polarization.
Optimists argue that we’ll eventually see a "trickle-down effect" where capital flows into these smaller companies. While I do believe undervalued companies will eventually have their day, I honestly have no confidence in when that timing will be.
Thanks for reading.
How do you view this lopsided bull market? Do you think the rotation into small/mid-caps is coming, or will the large-cap dominance continue? I’d love to hear your thoughts