South Korea’s Stock Boom Turns Into a Billion-Dollar Backlash

Parliament building with a green dome and flagpoles — Photo: Efired / Shutterstock

South Korea’s stock market tripled in value under President Lee Jae Myung, then lost nearly 40% of that gain in a matter of months, turning his boldest campaign promise into his biggest political risk.

Story Snapshot

Lee campaigned on pushing the Kospi index above 5,000 points and ending the so-called “Korea discount.”
The market blew past that goal, hitting over 8,000 points before crashing into a bear market this summer.
Lee’s personal stock fund purchases posted huge paper gains, then drew criticism as the market reversed.
Angry investors and news outlets now blame Lee directly for the swings he once took credit for.

A Campaign Promise Becomes Market Reality

During his 2025 campaign, Lee promised to push South Korea’s Kospi index past 5,000 points and end the “Korea discount,” the long-standing gap between Korean stock values and those of similar companies abroad. On the day he was sworn in, the Kospi jumped 2.66% to a fresh yearly high, with investors betting on his pro-market agenda. Weeks later, his vow of more stock market reforms triggered another sharp rally.

The Rally Blows Past Every Target

The Kospi did not stop at 5,000. It kept climbing past 6,000, then 8,000, fueled partly by a boom in artificial intelligence and semiconductor stocks tied to giants like Samsung Electronics and SK Hynix. Lee leaned into the momentum, telling reporters the market had “risen faster than expected” and calling the surge a case of “normalizing abnormalities” after years of undervaluation.

Lee’s own money rode the wave. Reports tracked exchange-traded fund purchases tied to the president, showing paper gains exceeding 150% at points during the rally. Those figures became a talking point for supporters who saw them as proof his reform pitch was working, translated into real returns for an investor-president willing to put his own cash behind his promises.

Then the Market Turned

The good times did not last. Reuters reported the Kospi later shed roughly a quarter of its value in a sharp reversal, and Bloomberg said the index eventually fell about 40% from its peak. What had been called a world-beating rally turned into what Reuters described as a “world-beating bear market,” rattling investors who had piled in near the top.

By August, Bloomberg reported the “stock-loving” president was facing direct criticism over the wild swings he had once celebrated. Everyday Koreans who bought in during the boom, encouraged by talk of a Kospi 5000 or even 10,000 era, watched their accounts shrink fast, and some vowed publicly not to trust the market again.

Lee Tries to Calm Nerves, But Words Cut Both Ways

Facing the backlash, Lee called the market “unstable” and said it needed time and fluctuation to find its footing. He also cautioned investors directly, saying, “Do not use what I say today as reference material for deciding trades”. Those same comments now let critics argue that a president who once claimed credit for record highs is dodging blame for the losses that followed.

The KOSPI fell 10.84% on Tuesday. Everyone is blaming the Fed. The data says otherwise.

I wrote up what actually broke in July: index concentration, forced liquidation, and the AI capex bill. https://t.co/kSiOyRD84C

— Sam (@officialsweetch) July 28, 2026

A separate flashpoint added fuel to the fire. When Lee’s government floated lowering the threshold for stock capital-gains taxes, the market dropped 3.88% the very next day, a reminder that policy missteps can spook investors just as fast as reforms can excite them. The episode shows how fragile the “Kospi 5000” story became once losses started piling up.

Why This Matters Beyond the Trading Floor

This is not just a story about stock charts. It is a test of whether a leader can turn a market rally into lasting proof that government reform works, or whether the same rally simply exposes how much of modern prosperity rides on forces no politician fully controls, like global chip demand and artificial intelligence spending. Millions of ordinary Korean households now have real money riding on the answer.