Will South Korea’s epic bull market survive the energy shock?

IN HIS VICTORIOUS campaign for South Korea’s presidency last spring, Lee Jae-myung ran on the promise of “KOSPI 5,000”. As election pledges go, it was admirably specific. It also seemed like a long shot. At the time the country’s benchmark stockmarket index stood at half that, down from a peak of 3,300 or so in 2021. Yet by late January, less than eight months into his tenure, Mr Lee had kept his word. Within another month the KOSPI had burst through 6,000, making the slogan look unambitious. In the 12 months to the end of February the index rose by 138%, leaving all the world’s notable bourses in the dust. Nothing could stand in its way.

Except, that is, an energy shock. In the two trading days after America and Israel attacked Iran the KOSPI plunged by nearly a fifth, now outdoing other major indices on the way down. As a big energy importer, South Korea suffers whenever oil and natural-gas prices rise. With its habitual suppliers in the Gulf paralysed by war, the government has vowed to increase output at coal-fired power plants and cap prices for consumers. Foreign investors had already been cashing out before the war; big domestic ones have started joining in the sell-off. So is the KOSPI bull run kaput?