South Korea is best-performing market in June: Here's why

The local bourse stands as the best performing stock market among the G20 based on findings from June second to June 25th.

Our economic correspondent Park Jun-han takes a look at the factors that fueled the rally.

As of Wednesday, South Korea's benchmark KOSPI recorded the highest return for June among major economies.

According to data from the Korea Exchange, South Korea's benchmark KOSPI gained over 15% from June 2 to June 25.

This is by far the largest increase among G20 countries, as no other economy has seen gains exceeding 5% during the month so far.

In terms of index gains in 2025, the KOSPI is up over 700 points — from below 2,400 on January 2 to over 3,100 on June 25.

This represents an increase of over 29% in less than six months.

Among the various factors that led to the rally, experts point to eased uncertainties, and high expectations for the new Lee Jae Myung administration's economic policies as key reasons for the surge.

"The weakening of the dollar, coupled with a cycle of fiscal policy expansion and interest rate cuts in emerging economies outside the U.S., have created a favorable environment for investment.

After a period of political uncertainty, the snap presidential election removed some of this and resulted in a strong inflow on policy expectations."

The first half of 2025 in South Korea was marked by both internal and external uncertainties, which the market is extremely sensitive to.

The political instability caused by the martial law declaration last December by then-President Yoon Suk Yeol pressured investor sentiment and led to an outflow of foreign funds.

Moreover, tariff threats from U.S. President Donald Trump also negatively impacted investor confidence.

In early April, Trump announced plans to impose 25% "reciprocal tariffs" on Korea.

The announcement heightened concerns about inflation and contributed to a weakened competitiveness for South Korean exports.

However, Trump temporarily suspended the tariffs for 90 days just days after his initial announcement, leaving room for negotiation.

Since then, stock markets around the world, which had plunged earlier, began to rebound.

President Lee, who has long promised to usher in the "KOSPI 5,000 era," declared the start of a new chapter, as quote, a "new period with new hopes."

Lee also visited the Korea Exchange earlier this month and highlighted the importance of dividend payouts and a zero-tolerance policy for stock price manipulation, pledging to lead the market through various reforms, including shareholder return policies and amendments to the Korean Commercial Act.

However, there are potential concerns behind the rally.

Tariff negotiations are approaching, with less than two weeks left until the deadline.

Also, although there's a temporary ceasefire, the Middle Eastern conflict between Israel and Iran could heighten market uncertainties if both sides clash again.

"In the case of wars, we'll have to wait and see how long they last and how predictable they are, as both factors will affect the economy going forward."

"I think the overall U.S. economy and tariff policy, along with South Korean companies' second quarter results, will be key factors in determining how our stock prices move in the third quarter."

Now, the index has broken the crucial psychological resistance level of 3,000, investors are keeping a close eye on whether the rally can be sustained.

Park Jun-han, Arirang News.