🚨 KOSPI Hits Record High 3461
Today Korean Economic News for Beginners | 2025.09.21
0️⃣ US Fed Rate Cut Sparks Foreign & Institutional Buying, Samsung Hits 80,000 Won
📌 Fed's First Rate Cut in 9 Months Drives Korean Stock Market Rally, Semiconductor Stocks Lead Gains
💬 The US Federal Reserve cut interest rates for the first time in 9 months, causing an explosive reaction in Korean stock markets. On September 18th, KOSPI closed at 3461.30, up 47.90 points (1.40%) from the previous day, setting another all-time high. When the Fed lowered rates from 4.25-4.50% to 4.0-4.25%, foreign and institutional investors bought 286.3 billion won and 430.7 billion won respectively, driving the rally. Samsung Electronics rose 2.94% to 80,500 won, returning to the "80,000 won club" for the first time in 13 months. SK Hynix surged 5.85% to set a new record closing price. With the Korea-US interest rate gap narrowing to 1.75 percentage points, expectations are growing for a Bank of Korea rate cut in October, suggesting the stock rally may continue.
1️⃣ Easy Explanation
When the US cut interest rates, Korean stock markets exploded upward. KOSPI hit new record highs day after day, reaching 3461, because global investors are buying Korean stocks in large amounts.
Let me explain why US rate cuts affect Korean stock markets. When the US lowers rates, investors earn less interest on dollar investments. So they look for higher returns in other countries' stock markets. Korea's stock market became one of those destinations for this "money migration."
The Fed cut rates this time because the US economy is slowing down. The job market is getting weaker, so they decided economic stimulus was needed. The Fed lowered the base rate from 4.25-4.50% to 4.0-4.25% by 0.25 percentage points. This was the first rate cut since December, ending a 9-month freeze.
This US rate cut is good news for Korea for another reason. The interest rate gap between Korea and the US was 2 percentage points, but now it's down to 1.75 percentage points. When the gap is big, money flows to the country with higher rates. Now that the gap is smaller, there's less pressure for money to leave Korea.
Foreign investors actually bought 286.3 billion won worth of stocks that day, and institutional investors bought 430.7 billion won. Meanwhile, individual investors took profits and sold 690 billion won. This shows that foreigners and institutions see high growth potential in Korea's stock market.
Semiconductor stocks rose sharply. Samsung Electronics hit 80,500 won, returning to 80,000 won for the first time in 13 months. SK Hynix reached 353,000 won, a new all-time high. Growing demand for AI and data centers is making the semiconductor industry outlook brighter, attracting investors.
In the end, the US rate cut gave Korean stocks new upward momentum, with global investors focusing especially on technology stocks.
2️⃣ Economic Terms
📕 Federal Fund Rate
The Federal Fund Rate is the US base interest rate that banks charge each other for overnight loans.
- The Federal Reserve uses this as their main monetary policy tool.
- When this rate goes up, money flows to the US. When it goes down, money spreads to other countries.
- This is a key indicator that greatly affects financial markets worldwide, including Korea.
📕 Net Buying/Net Selling
Net buying means a specific investor group bought more stocks than they sold.
- If foreigners bought 1 trillion won worth and sold 700 billion won worth, they net bought 300 billion won.
- The bigger the net buying, the more positive that group feels about the market.
- Net selling is the opposite - when selling exceeds buying.
📕 Korea-US Interest Rate Gap
The Korea-US interest rate gap is the difference between US and Korean base rates, a key factor in capital flows.
- The bigger the gap, the more money flows to the country with higher rates.
- Currently the US is at 4.0-4.25% and Korea at 2.50%, a 1.75 percentage point gap.
- When this gap narrows, pressure for money to leave Korea decreases.
📕 80,000 Won Samsung
"80,000 won Samsung" refers to Samsung Electronics stock price exceeding 80,000 won.
- Samsung Electronics has the largest market cap on KOSPI and greatly influences the entire market.
- Breaking 80,000 won has significant psychological meaning for market participants.
- This time it broke 80,000 won for the first time in 13 months, reflecting expectations of semiconductor industry improvement.
3️⃣ Analysis and Economic Outlook
✅ Global Liquidity Changes and Korean Stocks
Let's analyze how US rate cuts affect global money flows and what this means for Korean stocks.
First, we're seeing dollar weakness and preference for emerging market assets. When US rates fall, dollar investments become less attractive, leading to dollar weakness. This is positive for emerging market currencies and stock markets. The Korean won is also strengthening against the dollar, giving foreign investors potential currency gains too. The 286.3 billion won in foreign net buying that day likely reflects these big-picture economic changes.
Second, this could be a chance to resolve Korea's relative undervaluation. Korean stock markets have long been undervalued compared to global markets, earning the nickname "Korea Discount." Many stocks trade with price-to-book ratios below 1, meaning they trade below their liquidation value. But as global liquidity increases and investors reassess value stocks, this undervaluation is gradually being corrected.
Third, we're seeing selective investment focused on technology stocks. This rally was led by semiconductor stocks like Samsung Electronics and SK Hynix. As AI and data center demand grows, the medium to long-term outlook for semiconductors is brightening, drawing global investor attention to Korea's leading tech stocks. This is meaningful because it's fundamental-based investing, not just a liquidity-driven rally.
Changes in US monetary policy are providing new upward momentum for Korean stocks, with structural revaluation happening especially in technology stocks.
✅ Semiconductor Industry and Korean Stock Market Connection
Let's look at the fundamentals and future outlook for semiconductor stocks leading this rally.
First, exploding AI and data center demand is driving fundamental changes in the semiconductor industry. As generative AI services like ChatGPT spread, demand for high-performance memory and processors to run them is exploding. SK Hynix's high bandwidth memory (HBM) is a key component in NVIDIA's AI chips, and Samsung Electronics is seriously entering AI chip production with its 2-nanometer foundry process. These structural demand changes are the fundamental background for stock price increases.
Second, Korean companies are becoming more important in the global semiconductor supply chain. As US-China tech competition intensifies and Chinese semiconductor companies face sanctions, Korea is emerging as a "safe supplier." Samsung and SK Hynix are making large investments in the US, putting them in relatively safe positions regarding geopolitical risks. This is expected to lead to long-term market share expansion for Korean semiconductor companies.
Third, memory semiconductor industry recovery is gaining full momentum. The memory semiconductor market, which struggled with inventory adjustments and weak demand, is showing recovery. Especially with surging demand for server memory and AI-specific memory, both price increases and volume growth are happening simultaneously. The industry expects this upward cycle to continue until 2026, suggesting plenty of upside potential for related stocks.
Structural changes in the semiconductor industry and strengthening competitiveness of Korean companies are acting as core drivers of stock market gains, and this is expected to become a medium to long-term trend, not a short-term phenomenon.
✅ Bank of Korea Interest Rate Policy and Stock Market Outlook
Let's analyze how US rate cuts might affect Korea's monetary policy and what this means for stocks.
First, the possibility of a Bank of Korea rate cut in October has greatly increased. With the Korea-US rate gap narrowing to 1.75 percentage points, the BOK's policy room has expanded. Previously the gap was too large to cut rates, but now cutting by about 0.25 percentage points shouldn't create much capital outflow pressure. Markets see over 70% probability that the BOK will lower the base rate from 2.50% to 2.25% at the October monetary policy meeting.
Second, rate cuts will provide additional upward momentum for stocks. When rates fall, companies' funding costs decrease, making investment and business expansion more active. Investors also prefer risky assets like stocks over deposits, creating money inflows to stock markets. However, concerns about real estate market overheating might make the BOK cautious, so rate cut size or speed could be limited.
Third, we can expect won strength and reduced import inflation. If US rate cuts continue dollar weakness, the won will likely strengthen. This leads to lower commodity import prices, reducing inflation pressure. If price stability becomes certain, the BOK can pursue rate cuts more aggressively, creating a positive environment for stocks.
US monetary policy easing is expected to improve Korea's financial environment and continue stock market gains for some time, but managing side effects like the real estate market will also be an important variable.
4️⃣ Conclusion
The US Fed's first rate cut in 9 months provided powerful upward momentum for Korean stocks, with KOSPI writing new history at 3461. This should be interpreted as more than just a liquidity rally - it represents Korean companies' fundamentals being reassessed by global investors.
The most notable point is the combined net buying by foreign and institutional investors. Foreigners buying 286.3 billion won and institutions buying 430.7 billion won signals that they highly value Korea's medium to long-term growth potential. Investment in technology stocks, especially semiconductors, reflects structural changes like exploding AI and data center demand, suggesting a sustainable trend rather than a one-time phenomenon.
Samsung Electronics returning to "80,000 won" after 13 months and SK Hynix setting new record highs has symbolic meaning. This means Korea's stock market, which suffered from "Korea Discount," is starting to receive reasonable global-standard valuations. Especially as Korean companies' technological competitiveness in memory semiconductors and foundries is confirmed to be world-class, premium valuations are now possible.
The narrowing Korea-US rate gap provides another positive factor for Korean stocks. The gap shrinking to 1.75 percentage points expands room for BOK rate cuts in October, leading to increased domestic liquidity and improved corporate investment conditions. However, real estate market overheating concerns remain a variable, so policy authorities' sense of balance will be important.
Short-term additional gains seem likely, but investors should also consider several risk factors. US economic hard landing concerns, Middle East geopolitical risks, and Chinese economic slowdown could negatively affect global stock markets. Also, with KOSPI setting new highs daily, overheating signals are appearing, making appropriate profit-taking and risk management necessary.
Ultimately, KOSPI breaking 3461 signals that Korean stocks have entered a new growth stage. While increased global liquidity and improved fundamentals of Korean companies suggest sufficient medium to long-term upside potential, preparing for volatility and careful investment approaches remain important.
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