RISING TIDES
Observations from the IMC Research Process

Repricing the Korean Discount

Post-election optimism is igniting a broad-based rally in Korean equities, raising hopes of a long-awaited market renaissance.

• Reform mandate spurs risk appetite. Gains have been propelled by Lee Jae-myung’s presidential election win after promising market reforms and a revamp of the ‘Value-up’ program started under the previous administration. In June alone, the Kospi was up over 15% in USD terms versus the MSCI Asia-Pacific ex-Japan index up 5.7%. A surge in retail enthusiasm echoes renewed confidence among global investors that Korea’s stock market will break out of its historical underperformance, known as the “Korea discount.”
• AI-led industrials at the forefront. Korea’s AI and advanced manufacturing names are leading the charge. Stocks like Hanwha Aerospace and Doosan Robotics are riding strong tailwinds from global rearmament, factory automation, and generative AI infrastructure demand. Meanwhile, SK Hynix—a major beneficiary of AI server DRAM demand—is up sharply YTD, with investors increasingly treating it as Korea’s own NVIDIA proxy.
• This isn’t just a tech rally. Financials in particular like Kiwoom Securities, a retail brokerage, and Hana Financial, a major bank, have rallied on expectations of value-up initiatives. Cyclicals like Hyundai Mobis and shipbuilders including HD Hyundai have also broken out. This cross-sector strength – combined with small- and mid-cap participation—indicates that investors may be positioning for structural upside rather than a tactical bounce.