[Domestic Market] Will Santa Come? Q3 GDP Shock and KOSPI Diagnosis

[Year-End Emergency Check on the Korean Stock Market]

There is only one page left on the 2025 calendar. While the US stock market is hot day after day, our KOSPI is trapped in a box pattern, frustrating investors. Will the 'Santa Rally' that we hope for every year visit the Korean market this year? In this post, we coolly analyze the Q3 GDP shock that held back the Korean economy and the year-end supply/demand issues, and point out investment strategies to prepare for 2026.

KOSPI, Will Santa Come? GDP Shock and December Market Diagnosis

1. Unexpected 0.1% Shock, The Current State of the Korean Economy

The advance estimate of Korea's Q3 Real Gross Domestic Product (GDP) announced last month was enough to shock the market. This is because it stopped at 0.1% growth compared to the previous quarter, falling significantly short of the Bank of Korea's forecast (0.5%).

The problem lies in the details. It is painful that even 'Exports', which have been supporting the Korean economy, have taken a step back. As exports of automobiles and chemical products slowed, their contribution turned negative, and the recovery of 'Domestic Consumption' is still far off due to the aftermath of high interest rates. This is planting doubts about the profit stamina of Korean companies in the minds of foreign investors and is the fundamental cause of the recent selling trend.

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2. December KOSPI, Why is it so weak?

In addition to the sluggish GDP, there are other factors weighing down the Korean stock market in December. It is the phenomenon of 'Supply and Demand Entanglement' unique to the Korean market.

• Volume for Evasion of Major Shareholder Capital Gains Tax: Towards the end of the year, 'Big Hand' investors have a strong tendency to sell their held stocks to avoid taxes. This is the cause of increased selling pressure before the ex-dividend date.
• Thin Market: Trading value has plummeted due to book closing by institutional investors. Due to the lack of trading volume, a volatile market continues where stock prices fluctuate greatly even with small selling volumes.
• Uncertainty in the Semiconductor Industry: As Samsung Electronics and SK Hynix, the core of KOSPI, fail to find distinct upward momentum, the entire index is showing a heavy flow.

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3. 2026, Where is the Trigger for a Turnaround?

So, is the Santa Rally completely over? Even if a sharp rebound of the entire index is difficult, a selective approach looking towards 2026 is valid. There are two key keys for a turnaround.

Conditions for a Market Rebound

• Spread of Warmth from Interest Rate Cuts: The point in time when the effect of the Bank of Korea's interest rate cuts leads to the alleviation of household debt burdens and the recovery of domestic consumption (first half of 2026) will be the true inflection point for a rebound.
• Performance of the Value-up Program: If the government's Value-up policy leads to substantial shareholder returns (dividends, cancellation of treasury shares) by companies, the chronic 'Korea Discount' can be resolved and attractiveness can be highlighted.

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4. Conclusion: The Deeper the Winter, the Closer the Spring

Fellow investors, the current Korean stock market is certainly cold and dark. Although it is in the double whammy of a GDP shock and a supply vacuum, paradoxically, the PBR (Price-to-Book Ratio) remains at a historical low level.

Now is not the time to throw away stocks in fear, but the time to sow seeds by selecting companies with certain earnings improvements in 2026 and beneficiaries of the Value-up program. Please remember the fact that the true Santa comes not in a flashy sleigh, but within the patience of investors enduring the undervalued period.

Key Summary:
Due to the Q3 GDP shock (0.1% growth) and volume for evasion of major shareholder capital gains tax, KOSPI is showing weakness at the end of the year. However, if the effect of interest rate cuts and the Value-up program become visible in 2026, it could be an opportunity for bottom fishing.

The contents of this blog are for reference only for investment judgment, and investment decisions must be made under the individual's judgment and responsibility. In no case can the information on this blog be used as evidence of legal responsibility for investment results.