As the stock market plummeted on October 15, financial authorities held an emergency market inspection meeting led by Financial Services Commission Chairman Lee Ok-yeon. However, no concrete measures to stabilize the market were proposed, with officials merely stating that "market volatility has increased and the market has reacted excessively."
Market analysts interpret the urgency of the financial authorities' response as a reaction to the psychological threshold of the KOSPI index falling below 6000. The KOSPI, which once reached 9000, has now dropped to the 5000s, leading to criticism that the current government's achievements in revitalizing the capital market have been overshadowed. Coincidentally, the president's approval ratings have also been on a similar downward trajectory as the KOSPI.
According to the Korea Exchange, the KOSPI index closed at 5554.22, down 7.57% from the previous trading day. This marks a staggering 40% decline from its all-time high of 9385.59 on June 19. While it remains higher than the KOSPI's peak of 2934.31 just before the current administration took office on June 9, 2025, the rate of decline since reaching its peak has been steep.
Some observers are noting the correlation between the president's approval ratings and the stock market's sharp decline. The downturn in the once-booming stock market, considered the government's greatest achievement, coincides with a drop in national approval ratings. In fact, the trends of the president's approval ratings and the KOSPI are remarkably similar.
The president's approval rating started at 64% shortly after taking office, peaking at 65% in July 2025, before declining steadily for about 15 months. Notably, following the local elections on June 3, 2026, a Realmeter survey indicated a positive evaluation of 47.7%, marking the first time the approval rating fell below 50%. According to a Korea Social Opinion Institute (KSOI) survey conducted on October 14, the president's approval rating has dropped to a record low of 34.9%.
Since the KOSPI peaked at 9114.55 on June 22, 2026, when the president's approval ratings were at their highest, the index has rapidly declined, losing ground in July and August to the 6500-7000 range. Although it saw a slight rebound to 7000 in September, it has since plunged back to the 5500s within a month. The KOSPI has fallen 40% in just four months, coinciding with the president's approval rating dropping below 50% and reaching historic lows in the 30% range.
Market analysts argue that the KOSPI's sharp decline has exposed the "true face of the K-stock market." While the president's campaign promise of a KOSPI of 5000 was achieved at the time of his inauguration on June 16, 2025, the Korea discount remains a significant issue. As of today, the KOSPI's 12-month forward price-to-earnings ratio (PER) stands at 5, and the price-to-book ratio (PBR) is at 2.3, significantly lower than those of the United States (PER 22, PBR 5) and Taiwan (PER 19, PBR 5.7).
The performance of major stocks has not improved significantly either. The PER for Samsung Electronics and SK Hynix, reflecting their third-quarter operating profits, is currently at 3.7 and 3.4, respectively, which is considerably lower than competitors like Nvidia (18.4), Microsoft (27.5), and Google (26.1). This raises concerns about whether the Korea discount can be overcome.
Foreign and institutional investors are worried about the loss of policy momentum due to the decline in national approval ratings. A representative from a large foreign institutional investor stated, "Global pension funds invest over the long term, so they consider the continuity and reliability of government policies as crucial investment indicators. If the decline in national approval ratings leads to a loss of momentum for the current administration's corporate governance reforms and value-up policies, we could see a visible outflow of institutional funds due to declining market confidence."
* This article has been translated by AI.
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