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Investing.com - South Korea’s KOSPI index continues to outperform global equity markets, rising 33% year-to-date as of August 28, according to a new Morgan Stanley report.
The MSCI Korea index has performed even better, gaining 41% compared to the broader Asia ex-Japan index’s 17% increase during the same period. The market surged following the June 3 presidential election, driven by the new administration’s commitment to strengthening capital markets through Commercial Code amendments.
A notable pullback occurred on August 1 when the government announced its 2025 tax reform proposal, which includes reducing the major shareholder capital gains tax threshold. This news triggered a 5% drop in MSCI Korea, compared to a 1.6% decline in the broader Asia ex-Japan index.
Morgan Stanley maintains that the KOSPI index will likely remain above the 3,000 level despite recent volatility. The firm believes that while the reform path may be "more winding but not derailed," and secular growth stories "may be taking a breather but remain valid."
The report highlights that Samsung Electronics (KS:005930) is "getting over the hump" as the artificial intelligence story continues to develop, while secular trends in the Industrials sector remain intact. Additionally, Korea’s "anti-involution efforts" are providing relief to key underweight sectors such as Materials and Energy.
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