"KOSPI still cheap" Ministry of Economy and Finance optimistic on Korean stock market

"Room for further gains from foreign inflows, etc."

The Ministry of Economy and Finance said of this year's third-quarter economic growth rate (1.2%) that "the growth trend is expanding," and described it as a "typical economic recovery phase."

Kim Jae-hoon, Director General of the Economic Policy Bureau, said at an economic trends briefing held at the Sejong Government Complex press room on the 28th that "the third-quarter gross domestic product (GDP) is certainly much better than internal projections." He also explained regarding the annual growth forecast that "although there is uncertainty from US-China and Korea-US tariff negotiations, the likelihood of achieving a 1% growth rate is higher than in previous forecasts."

In its 'economic trends explanatory materials' that day, the ministry said "although the KOSPI index has surpassed the 4000 level, it remains undervalued," and mentioned global investment banks' 'Buy the Dip' strategy. 'Buy the Dip,' meaning buying at low prices, is a representative investment adage on Wall Street. It is unusual for the government to voice optimism about the stock market.

The reason the government expressed optimism about the market is its assessment that there remains significant room for the KOSPI to rise. The ministry introduced that major global investment banks such as J.P. Morgan and Morgan Stanley "also evaluate that the Korean market still has high valuation appeal."

There is also room for more foreign investor inflows. As of the 27th, foreign ownership of the domestic stock market stood at 34.9%, below the previous peak of 36.1% in August 2024. In the day's materials, the ministry added that "foreign capital inflows will continue," and "if market funds flow from real estate into productive sectors including the capital market, the KOSPI reaching 5000 can also be expected."

Reporter Kim Ik-hwan lovepen@hankyung.com