[Edaily Reporter Kim Kyeo-Re ] Bloomberg News pointed out on the 6th that the KOSPI index’s intraday drop below the 5,000 mark dealt a blow to the Lee Jae-myung administration, which had touted the stock market boom as a “political trophy.” As losses mount for retail investors who believe they invested in the stock market instead of real estate at the government’s urging, dissatisfaction with the government is also spreading.

Bloomberg reported that day that the market capitalization of the South Korean stock market, which stood at $5.1 trillion on June 22, had evaporated by approximately $1.7 trillion (about 2,300 trillion won) as of recently. The KOSPI fell more than 8% during the trading session to 4,911.28, breaking even the 5,000 mark—a key campaign pledge of President Lee. It had also plummeted 5.3% the previous day.
Bloomberg noted, “While the Lee Jae-myung administration touted the rally in South Korea’s stock market—once the hottest in the world—as a political trophy, this was largely driven by the global AI investment boom.” It added, “Now, the sharp stock market decline is sparking backlash from retail investors and testing public confidence in the Lee Jae-myung administration.”
Since taking office in June of last year, President Lee has pursued policies aimed at shifting household assets from real estate to the stock market. While tightening regulations on mortgage loans, he has sought to revitalize the stock market by improving corporate governance and expanding shareholder returns. During the presidential campaign, he pledged to reach a KOSPI level of 5,000, and last April, Jeong Cheong-rae, then-leader of the Democratic Party of Korea, even mentioned the possibility of reaching the 8,000 mark.
Buoyed by a surge in artificial intelligence (AI) investments, the KOSPI briefly soared to 9,114.55 before falling 40% from its peak. In contrast, housing prices in Seoul have risen for 91 consecutive weeks, extending the longest streak of increases on record.
Kim Min, a salaried worker, revealed that he postponed buying a home earlier this year to invest 40 million won in a KOSDAQ-related exchange-traded fund (ETF), but lost more than 65% of his investment in about seven months. “Looking back, it was completely insane for the government to encourage such a stock market rally,” he said. “Once I recover my principal, I will never buy Korean stocks again.”
Professor Koo Jeong-woo of the Department of Sociology at Sungkyunkwan University pointed out, “The president confidently urged the public to invest in stocks instead of real estate, but many who followed his advice are now suffering losses.”
It was reported that retail investors who borrowed money to invest suffered particularly heavy losses. According to IM Securities, stock purchases made when the KOSPI was above the 7,000 mark exceeded $60 billion, with the majority of those purchases coming from retail investors. Some leveraged ETFs linked to semiconductor stocks have fallen more than 70% from their peak.
The number of investors leaving the domestic stock market is also on the rise. Over the four months through October, Korean investors made net purchases of approximately $13 billion in U.S. stocks, while they made net sales of about $1.7 billion in KOSPI stocks. Bloomberg analyzed that “this trend could put pressure on the government’s efforts to curb capital outflows and support the value of the won.”
Professor Kang In-soo of the Department of Economics at Sookmyung Women’s University stated, “While revitalizing the stock market may be a government goal, setting specific targets like 5,000 or 8,000 could give the wrong impression.” He added, “In the public’s memory, the fact that the market plummeted after surpassing the 9,000 mark may leave a stronger impression than the achievement of a KOSPI level of 5,000.”