An electronic board at a Hana Bank dealing room in Jung-gu, Seoul, displays key market indicators on June 4, as Korea’s stock market surged following the inauguration of President Lee Jae-myung. The KOSPI jumped 71.87 points (2.66 percent) to close at 2,770.84, while the Korean won strengthened 3.6 won against the U.S. dollar to end at 1,369.50 won. / Reporter Jung Hyo-jin

On June 4, the day President Lee Jae-myung was inaugurated, Korea’s KOSPI index surged 2.7 percent, hitting its highest closing level of the year. The sharp rise reflects investor optimism over the new president’s pledges to boost domestic demand and drive the KOSPI toward the 5,000-point mark.

Market analysts remain largely positive, citing expectations for a second supplementary budget and reforms to corporate governance through amendments to the Commercial Act. However, concerns persist that the rally may be short-lived amid sluggish exports and a low-growth environment.

The KOSPI closed at 2,770.84, up 71.87 points (2.66 percent) from the previous session. It was the highest closing figure since August 1, 2023 (2,777.68), and marked the first time the index had broken through the 2,770 level in nearly a year. Since hitting its lowest close of the year on April 9 (2,293.70), the index has climbed 20.8 percent, officially entering bull market territory, which is defined as a rise of 20 percent or more from the low.

Foreign investors played a key role in the rally, making net purchases of 1.05 trillion won in KOSPI-listed stocks, which is their largest single-day net purchase this year.

Most large-cap stocks saw gains, including Samsung Electronics (up 1.76 percent) and SK Hynix (up 4.82 percent). Shares of financial firms and holding companies expected to benefit from Lee’s stock market revaluation policies, such as KB Financial (7.9 percent), Samsung Life (8.91 percent), Mirae Asset Securities (13.25 percent), SK Inc. (10.59 percent), and HD Hyundai (6.55 percent), also posted strong gains. Expectations of a second supplementary budget lifted consumer and domestic-focused stocks as well. President Lee’s first day in office set a new record for the highest KOSPI rise on an inauguration day under Korea’s direct presidential election system.

Excluding former President Lee Myung-bak (1.3 percent), the KOSPI closed lower on eight presidential inauguration days. For comparison, the KOSPI dropped 1 percent on former President Moon Jae-in’s inauguration day and 0.6 percent under Yoon Suk-yeol. This has led to growing interest in how the KOSPI will perform under the new Lee Jae-myung administration.

An analysis by the Kyunghyang Shinmun of KOSPI movements from presidential inauguration to end of term (or impeachment) since 1988 shows that only former President Roh Moo-hyun achieved triple-digit growth (184.8 percent), with a point increase of 1,094.2. The KOSPI rose by double digits during the terms of Kim Dae-jung (19.3 percent), Lee Myung-bak (18.1 percent), and Moon Jae-in (15 percent). In contrast, it declined under Yoon Suk-yeol (-5.1 percent) and Kim Young-sam (-17.5 percent).

The outlook from the financial sector on the new administration remains mostly positive.

Kim Yong-goo, a researcher at Yuanta Securities, said, “The new administration's policies, which are centered on fostering new growth engines and normalizing the stock market through Commercial Act reforms, are targeting the core structural issues.”

He added, “Given that the government is presenting specific policy prescriptions and pushing immediate structural improvements, the impact on the stock market is likely to be largely positive.” Still, macroeconomic uncertainties remain. Concerns include worsening low growth due to weak exports, which is exacerbated by U.S. trade policy, and the global financial environment. The domestic and international markets have repeatedly come under pressure whenever the U.S. Federal Reserve signals a delay or reversal in its rate-cutting trajectory.