South Korea’s Kospi Surges to Record Amid Tax Policy Reversal
South Korea’s benchmark Kospi index climbed to a fresh record high of 3,420.23 on Monday, marking its tenth consecutive session of gains. The rally followed the government’s announcement that it would abandon a previously planned tax increase on stock investments, a move that alleviated investor concerns and boosted market confidence.
The smaller Kosdaq index also edged higher by 0.15% in early trade.
Mixed Performance Across Asia-Pacific Markets
Elsewhere in the region, markets showed a mixed tone as investors monitored high-stakes talks between the United States and China in Madrid. The discussions, led by U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer alongside Chinese Vice Premier He Lifeng and top trade negotiator Li Chenggang, focused on critical issues including national security, trade disputes, and the looming deadline for the U.S. to divest from the Chinese short-video app TikTok.
Hong Kong’s Hang Seng Index opened 0.16% higher, with the Hang Seng Tech index gaining 0.27%. China’s CSI 300 index rose 0.59%, despite data showing a slowdown in the mainland economy during August. Retail sales and industrial output fell short of expectations, while real estate investment contracted sharply by 12.9% in the first eight months of the year.
Australia’s ASX/S&P 200 declined 0.34%. Markets in Japan and Malaysia were closed for holidays.
U.S. Market Outlook and Economic Context
U.S. equity futures were largely flat during early Asian trading as investors awaited the Federal Reserve’s policy meeting later this week. The market is priced for a potential interest rate cut when the Fed concludes its session on Wednesday, supported by recent economic data indicating a weakening labor market and subdued inflation pressures.
Last week, the Nasdaq Composite reached a new record, closing with a 2% weekly gain. The S&P 500 posted its strongest weekly advance since early August, rising 1.6%, while the Dow Jones Industrial Average recorded its first positive week in three, climbing 1%.
These gains reflect growing optimism that the Fed may ease monetary policy to support economic growth amid softer labor market figures and tame inflation.
— Reporting by Sarah Min and additional contributions from CNBC.
FinOracleAI — Market View
South Korea’s decision to scrap the tax hike on stock investments has clearly galvanized investor sentiment, driving the Kospi to a record high. This policy reversal reduces regulatory uncertainty and supports equity valuations in the near term. However, broader Asia-Pacific markets remain cautious amid mixed economic data from China and ongoing U.S.-China tensions, which could introduce volatility.
Key risks include potential setbacks in trade negotiations and further economic slowdown in China, which may weigh on regional markets. Investors should monitor the outcomes of U.S.-China talks and upcoming Fed policy decisions closely, as these will influence market direction in the short term.
Impact: positive
