Analysts at Bank of America believe South Korea’s financial markets may continue to perform strongly in 2026, pointing to several economic and policy factors that are creating momentum for stocks and the currency.
1. Strong Export Growth Driven by Semiconductors
One of the biggest forces behind the bullish outlook is the surge in exports, especially in the semiconductor industry. South Korea’s exports climbed sharply at the start of 2026, with chips making up a large portion of total shipments and helping produce a sizable trade surplus. This growth has strengthened the country’s external position and boosted confidence in corporate earnings.
2. A More Hawkish Central Bank
Another reason for optimism is the shift in monetary policy expectations from the Bank of Korea. The central bank has raised its growth outlook and signaled that additional interest rate cuts are unlikely. Markets are even starting to anticipate rate increases, which could support the Korean won by narrowing the interest-rate gap with the United States.
3. Government Measures Supporting the Currency
Policy actions from the South Korean government are also playing a role. Officials have taken steps to strengthen the currency and financial markets, including changes to how large institutional investors allocate funds and programs designed to attract capital inflows. These initiatives are expected to reduce demand for U.S. dollars and increase investment into domestic assets.
4. Capital Inflows and Structural Market Support
Another key factor is the expected increase in foreign investment. Analysts anticipate significant inflows as global investors allocate funds into South Korean markets, partly due to upcoming index inclusions and supportive policy frameworks. These developments could provide additional demand for both Korean bonds and equities.
✅ Summary:
According to Bank of America’s analysis, South Korea’s market strength in 2026 is being supported by robust semiconductor exports, shifting monetary policy expectations, proactive government measures, and increasing global investment flows. Together, these factors could help sustain the country’s ongoing market rally.
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