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2d ago

Kospi Rally Cools After Record Run as Investors Brace for Fed, Tariff Risks

Foreign-led chip gains followed Seoul’s decision to keep the major-shareholder capital gains tax threshold at 5 billion won.

The Korea Exchange headquarters in western Seoul on Sept. 15, 2025 (Yonhap)
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Finance Minister Koo Yun-cheol speaks at a meeting of economy-related ministers in the government complex in central Seoul on Sept. 15, 2025. (Yonhap)
Finance Minister Koo Yun-cheol (L) speaks at a policy consultation meeting between the government and the ruling Democratic Party held at the National Assembly in western Seoul on Sept. 15, 2025. (Yonhap)

Overview

  • South Korea kept the capital gains tax threshold for major shareholders at 5 billion won, reversing a July proposal to cut it to 1 billion won.
  • The policy shift fueled a multi-day surge led by Samsung Electronics and SK hynix, with the Kospi closing at a record 3,449.62 on Sept. 16 after foreigners bought more than 1.7 trillion won in shares.
  • On Sept. 17 the index fell 1.05 percent to 3,413.40 as investors took profits ahead of the U.S. Federal Reserve’s rate decision, with chipmakers leading declines.
  • Foreigners and institutions turned net sellers on Wednesday, the won eased to around 1,380 per dollar, and analysts cited overbought conditions and sensitivity to global cues.
  • Both the Democratic Party and the People Power Party sought credit for the rally, while market watchers warned that inconsistent policy signals and potential higher U.S. tariffs on semiconductors and pharmaceuticals, flagged by President Donald Trump, could add volatility.