Korean Market (19th Dec. 2025)

Korea at Year-End: How Global Capital Is Positioning

Today’s Market Reality

• As markets approach year-end, rates — not growth — remain the dominant driver of asset allocation.
• U.S. Treasury yields have stabilized near recent lows, reinforcing expectations that the next major policy move is easing, not tightening.
• Global investors are increasingly comfortable carrying risk into year-end, favoring markets with clear earnings visibility and global exposure.

What the Market Is Still Getting Wrong

• Korea continues to be discussed through a domestic-demand lens, which materially understates its role in the current cycle.
• Global capital is not buying Korea for consumption recovery — it is buying export leverage to AI, data centers, and global manufacturing normalization.
• Recent KRW weakness is often framed as a macro warning sign; in reality, it reflects conservative policy timing rather than deteriorating fundamentals.

U.S. Signals That Matter Most

• The Fed’s latest communication confirmed a steady stance: inflation is easing, labor momentum is cooling, and policy patience is warranted.
• Markets now price early-2026 rate cuts with higher confidence, compressing global discount rates.
• The USD remains soft, supporting foreign inflows into Asia despite pockets of FX volatility.

Trump, G2, and Structural Capital Shifts

• Trump transition rhetoric continues to emphasize China tariffs, strategic manufacturing, and technology security.
• While this raises short-term uncertainty, it accelerates long-term supply-chain diversification.
• Korea remains one of the clearest beneficiaries as a trusted supplier in semiconductors, EV components, and advanced manufacturing.

Korea Through Global Eyes

• Foreign investors increasingly view Korea as a high-beta play on global AI infrastructure, not a traditional emerging-market trade.
• Semiconductor earnings visibility has improved meaningfully, particularly in AI memory and server-related components.
• Domestic indicators remain mixed, but global investors are prioritizing external demand strength over local softness.

What Matters Into Year-End

• Whether U.S. yields remain anchored near current levels
• Whether KRW stays within its recent trading range rather than breaking higher
• Whether foreign flows continue to concentrate in semiconductors and financials

If these conditions hold, Korea remains a market to accumulate selectively on pullbacks, not one to fade into year-end.

This content is not investment advice. Investors are responsible for their own decisions.