Executive Summary

Dismissing 2026’s KOSPI rally as ’lucky’ misses something important. The core is two axes. First, earnings (performance) forecasts jumped upward, causing index levels themselves to be re-rated. KOSPI closed 2025 at 4,214.17 on December 30, then rose to 5,224.36 on January 30, 2026, marking approximately +24% (closing price basis). Second, this rally is closer to results of overheating→emergency braking→reacceleration repeated by engine rooms centered on market cap leaders (especially semiconductor top two) rather than a picture of “the whole market uniformly improving.”

Early February’s ‘rollercoaster’ starkly shows this structure. On Monday, February 2, KOSPI plunged -5.26%, facing a ‘Black Monday,’ with even sell-side sidecars triggered. But just a day later on Tuesday, February 3, it surged +6.84% to renew all-time high closes, this time triggering a buy-side sidecar. Bizarre scenes appeared where the index was strong but fear index (VKOSPI) exceeded 50. This is a textbook “rising while shaking terrifyingly.”

In conclusion, the answer to “why is KOSPI strong” doesn’t end in one sentence. On top of ‘basic strength’ created by earnings (especially semiconductor) upgrades, ‘shock waves’ created by policy, interest rates, exchange rates, and commodity shocks amplified through derivatives and program trading, and in that process individual investors, foreigners, and institutions engaged in tug-of-war at different timings to produce today’s numbers.

Data Range and Interpretation Standards

The analysis period is from December 30, 2025 (2025’s final trading day) to February 12, 2026 (including intraday). Since some figures for the 12th may be intraday updates (real-time/delayed data), it’s safer to read through February 11 closing as ‘confirmed section,’ February 12 as ‘ongoing section’.

For indices (KOSPI), volatility (VKOSPI), and U.S. volatility index (VIX), public data pages were used in parallel for daily time series, and sidecar triggers prioritized disclosures (market operation notices). Supply-demand (individual/foreign/institutional net buys) can have slightly different numbers between “KRX single market basis” and “exchange integrated aggregation (media notation),” but tables in the text focused on reconstructing large-scale directionality (tilt in trillion-won units).

The +24% Since Early Year is a Story of ‘Earnings Jumping’ Not ‘Prices Jumping’

First, the phrase “approx +24% since early year” has different meanings depending on when to where is considered early year. The widely shared +24% this time substantially points to the section where KOSPI rose from 4,214.17 on December 30, 2025 to 5,224.36 on January 30, 2026 (closing price basis). Calculating gives +23.97%, which rounds to +24%. After experiencing early February’s plunge and surge, the February 11 close stood at 5,354.49, up about +27% from year-end. On February 12, it gained enough speed to even touch the 5,500 line intraday.

Then what was the engine? The biggest axis is ’earnings forecast upgrades’. During Q4 2025, KOSPI 2026 net income consensus was significantly upgraded, with research summaries disclosed that most of the upgrade came from a few large caps (essentially “two stocks”). The very simple principle operates here: “when earnings forecasts rise, stocks at the same spot become not ’expensive stocks’ but ‘stocks with improved earnings.’” Like housing, home prices rise sometimes because ‘surrounding market prices rose,’ but also sometimes because ‘homeowner salaries rose improving loan repayment capacity.’ This phase had more of the latter.

These “two stocks” ultimately symbolize semiconductor cycles. For representative company Samsung Electronics, target price upgrades continued based on memory price cycle entry and product mix (HBM, etc.) improvements, plus quarterly performance potentially exceeding consensus. Markets began accepting this as “ratings changed” rather than “prices rose.” Indeed, data shows that as KOSPI rapidly leveled up in late January, while index levels rose, index valuation (e.g., 12M Fwd P/E) actually decreased. KOSPI at 5,221pt on January 29 showed P/E 10.88, near the all-time high (5,371.10) on February 4 P/E presented at 9.37. When only prices rise, P/E usually also jumps, but here it reads as a signal that ’earnings (denominator) increased more than price increases.’

Here policy and expectations pile on. Domestically, flows like reducing ‘Korea Discount’ and corporate value improvement (value-up) were continually mentioned, and even when KOSPI exceeded 5,000, frames that “still low” from PBR perspectives emerged as political/policy messages. (Policy messages often operate as signals to markets saying ‘we’ll open paths.’ Like how before customers come, rents jump when ‘business permits’ fall in front of stores.)

The global interest rate environment can’t be ignored either. The Federal Open Market Committee in January 2026 maintained the target range at 3.5-3.75%, and domestically the Bank of Korea also maintained the base rate at 2.50% on January 15. The environment of “not tightening urgently further” gives breathing room to risk assets. Simultaneously, expectations remain for “when the next cut is,” creating floors where funds easily pour into good performance (especially sectors where global demand attaches like semiconductors).

Early February’s Plunge and Surge Are Closer to ‘Mechanical Chain Reactions’ Than ‘Narratives’

To understand early February, viewing stock markets only through ‘people’s emotions’ is insufficient. Markets are giant chain devices mixing people + automated trading + derivatives (futures/options) + collateral (margins) + exchange rates. Like elevators suddenly falling down when one button is wrongly pressed, sections emerge where prices move not ‘for reasons’ but ‘unable to stop.’ February 2 was exactly that.

February 2 (Monday) shock’s trigger point was widely cited as the “Warsh shock.” At that time, international gold and silver prices plunged in a day, with analysis emerging that background included Donald Trump President nominating hawkish-classified Kevin Warsh as next Fed Chair candidate, which heightened market uncertainty. Here, CME Group’s precious metals futures margin requirement strengthening notices overlapped, creating interpretations that leveraged investors’ margin calls (additional margin demands) created chain liquidations. When gold and silver shake, it becomes a psychological signal that “safe assets collapsed,” and simultaneously leveraged positions being forcibly liquidated can shake risk assets together. Indeed, on February 2 KOSPI plunged -5.26% to close at 4,949.67, and the won-dollar exchange rate surged to the 1,460 won range.

Inside the market that day, machines made louder noises. As KOSPI200 futures plunged, program trading sell order temporary suspension (sell-side sidecar) triggered (futures prices declining -5% or more from previous day’s close sustained for 1 minute). Foreigners and institutions each recorded trillion-won net sells and individuals received massively but were insufficient to stop the index. The fear index called VKOSPI also jumped to 47.37, stamping “anxiety” into prices.

But Tuesday, February 3 flipped the scene. KOSPI surged +6.84% to close at 5,288.08, hitting new all-time high closes again. And this time futures jumped in the overheating direction, triggering a buy-side sidecar. Supply-demand also dramatically reversed as institutions and foreigners turned to net buys while individuals leaned toward net sells. This rebound is closer to “fear was priced in too quickly” rather than “fear disappeared.” Indeed, reports followed that gold/silver shocks entered calming phases in a day as domestic gold prices rebounded.

February 4 (Wednesday) was an extension of the rise. KOSPI closed at 5,371.10, crossing the 5,300 line for the first time on a closing basis, and amid large-cap flows like Samsung Biologics, a symbolic event occurred where Samsung Electronics opened the 1,000 trillion won market cap era. But what’s interesting is that while the index renewed highs, VKOSPI exceeded 50 (February 3: 50.14 → February 4: 50.70). It’s a state of “people smiling happily but heart rates at hyperventilation levels.”

And February 5 (Thursday) plunged again. KOSPI fell -3.86% to close at 5,163.57, with reports emerging that foreigners recorded all-time largest daily net sells (about 5 trillion won) on KOSPI. VKOSPI soared to 52.21, with evaluations continuing of post-pandemic highest levels. In other words, early February is a section to see how rough the ‘vibration’ created by leverage, supply-demand, and derivatives became rather than asking “is it an uptrend or downtrend.”

Time Series Key Indicators Table

The table below organizes the early February plunge-surge (Black Monday → sharp rebound → re-plunge) section by date. KOSPI closing prices and daily change rates are based on daily public data (index historical data), and VKOSPI and VIX also used daily closing (or intraday update section included) public data. Sidecar triggers were confirmed by market operation notices, and supply-demand reflected amounts displayed in major media reports.

Futures, Options, Program Trading, Sidecars: “Why Automatic Doors Close Before People”

Easily comparing derivatives and program trading goes like this. Spot (stocks) is ‘actual goods’, and futures is closer to ‘pre-reserved delivery contracts’. Markets don’t only have people who “buy today and give tomorrow,” but many people rolling with contracts saying “will deliver/receive at this price a month later.” The problem is these contracts are generally stacked on margins (collateral). When collateral becomes insufficient, contracts are forcibly settled, and prices slip before people can hit brakes. The reason explanations emerge that margin calls created chain liquidations in the February 2 gold/silver markets is here.

Program trading is an engine that automatically buys and sells using such futures-spot differences. Normally it increases market liquidity, but at certain moments it can rush to one side faster than crowd psychology. So Korea Exchange has a safety device that “briefly locks automatic doors when too urgent.” That’s sidecars. On February 2, sell-side sidecars triggered as KOSPI200 futures prices declining -5% or more from previous day’s close sustained for 1 minute, and on February 3, conversely futures surging triggered buy-side sidecars. On February 6, sell-side sidecars triggered again from futures plunges.

From investors’ perspectives, the existence of sidecars is more practically read as a signal that ‘automated trading is now racing through market center’ rather than “the market panicked so unconditionally bad.” Adding one more analogy, sidecars don’t stop entire roads but feel like “briefly controlling only expressway lane 1 (program quotes).” Devices that stop entire sessions (circuit breakers) exist separately, but early February KOSPI’s fluctuations had many scenes explained in sidecar sections.

When options pile on here, markets become more ‘sensory hypersensitive.’ VKOSPI is expected future volatility estimated from KOSPI200 option prices, values where markets price in money “how much will fluctuate over the next month.” VKOSPI jumped to 47.37 on February 2, 50.14 on February 3, 50.70 on February 4, with reports emerging that breaking the 50 line was the first time since early pandemic. The interesting part is that even with VKOSPI jumping like this, KOSPI hit all-time highs on February 4. In other words, “fear index rise = index fall” isn’t an automatic formula, but can become a picture of ‘in a state where fear (hedge demand) grew, specific engines (large caps) pulled harder.’

The U.S. side ‘fear index’ called VIX jumped to 21.77 during the same period on February 5, then fell back to the 17 range. That VIX also jumped on the day KOSPI plunged on February 5 suggests that day’s volatility wasn’t just “Korea’s story” but intertwined with global risk appetite changes.

Performance and Valuation Centered on Top 10 Market Cap Companies: Days Closer to ‘Sam-Ha-Fi’ Than ‘KOSPI’

The reason early February volatility was particularly rough is that KOSPI became an index where engine thrust from a few mega-caps grew too large rather than “an index that diverse stocks evenly pull up.” Even as of mid-January, reports emerged that market cap ranks 1-2 (Samsung Electronics, SK hynix) had very large weights, with the two stocks’ ratio in total market cap around 35%. Such indices are like games where two large SUVs grip tug-of-war ropes. No matter how much other participants endure, when the two change direction, the entire game board warps.

In the February 2 plunge, this concentration plainly showed. Reports emerged that the semiconductor top two being heavily pushed caused the index to collapse, and in the February 3 rebound too, evaluations repeated that semiconductors surging pulled up the index. Especially on February 3, Samsung Electronics (+11.37%) and SK hynix (+9.28%) jointly surged with estimates emerging that the two stocks’ market cap increased 166 trillion won in a day. Conversely, interpretations abounded that the February 5 plunge had foreigners’ large-scale sells (especially semiconductor-centered profit-taking) amplifying index declines.

This “top stock concentration” creates gaps between feelings and indices. Indices jump, but my account feels stuffy. Indeed, recent market comments emerge like “days with more declining stocks than rising stocks exceeded half.” It’s talk that structures easily emerge where even when indices rise, feelings stay cold.

Here valuation (especially “is PER expensive?”) debates aren’t simple. Since semiconductors’ earnings shake greatly by economy/cycles, markets sometimes try to explain with PBR/ROE frames rather than PER. Indeed, report interpretations emerged like “SK hynix should be viewed by PBR rather than PER,” with flows observed presenting high appropriate PBR based on high ROE forecasts. In other words, the answer to “looks expensive but why rising?” is likely not simply ‘bubble’ but results synthesizing (1) speed of earnings rising, (2) market’s belief in earnings duration, (3) supply-demand shocks created by index concentration.

Top 10 Market Cap Companies’ Change in Stock Price, Market Cap, PER vs Early Year Table

The table below aims to gather “top 10 engines creating KOSPI rally” on one screen. However, ‘PER change vs early year (by company)’ requires batch extraction from unified public sources, and in the current environment there are constraints on completely filling company-by-company PER with identical standards (identical timing, identical formula). So this table presents (a) top 10 market cap composition, (b) observable changes of some core stocks (especially semiconductors), and (c) index valuation (KOSPI P/E) movements together. It’s a practical compromise needed to understand “top stock-centered sessions.”

(Note) KOSPI index valuation (P/E) presented from 10.88 on January 29 (KOSPI 5,221pt) to 9.37 on February 4 (KOSPI 5,371pt), falling (or decelerating) even in price rising sections. This can be interpreted as evidence that top stocks’ earnings forecast upgrades operated strongly.

Sustainability: “What Breaks It When Broken” Comes Before “Can It Rise More”

To see sustainability, checklists beat hope circuits. But if checklists are too hard, they ultimately aren’t checked. So simplify cores into three branches. (1) Do earnings continue renewing, (2) Don’t ’emergency stops’ emerge from exchange rate/interest rate/policy variables, (3) Don’t sections lengthen where supply-demand endures with only one specific side (individuals/foreigners/institutions)

First, the earnings axis. Market bets on semiconductors coexist between claims that “this cycle is structurally different” and “peak debates.” Indeed, reports emerged that early February foreigners’ large-scale sells concentrated on the semiconductor top two, suggesting possibilities of mixing “rise fatigue + global AI sentiment.” Conversely, when semiconductor strength reignites, catalysts like U.S. semiconductor index flows or individual company comments (e.g., HBM-related) also quickly transfer to domestic large caps. In other words, sustainability’s first threshold is “the moment semiconductor earnings upgrades stop.”

Second, the exchange rate/interest rate/policy axis. Like the February 2 plunge when exchange rates surged (won weakness), foreigners can easily reduce positions because “FX losses” can grow even with profits. Indeed, scenes like February 2 won-dollar exchange rate surge, February 11 exchange rate decline (won strength) are often interpreted intertwined with risk appetite. Policy sides are more subtle. Sections eating expectations are sensitive to policy signals, and conversely when policy can’t follow expectations, disappointment comes quickly. System improvement messages (Commercial Act amendments, etc.) surrounding KOSPI 5,000 also have influence in that they’re used for “valuation justification” rather than just “talk.”

Third, the supply-demand axis. Early February repeated scenes where individuals “received,” foreigners “threw,” and institutions “occasionally changed direction.” Individual net buy ₩6.7T (all-time largest) and foreign net sell ₩5T (all-time largest) hitting the same day on February 5 shows how roughly the market is in tug-of-war. Afterward, flows observed of indices recovering levels again as foreigners turned to net buys from February 9-11. But such markets easily become “games enduring shaking” rather than “games getting answers right.” Especially so in sections where VKOSPI exceeds 50.

Finally, this market’s most realistic risk condenses to one sentence. The stronger KOSPI is, the closer KOSPI becomes to ‘a few top stocks’ rather than ’entire KOSPI.’ So news that “indices are at all-time highs” and feelings that “why is my stock the same” coexist. The more that gap grows, the more easily volatility jumps even to small shocks.

  timeline
    title 2026 Early KOSPI Rollercoaster Timeline (Key Events)
    2025-12-30 : KOSPI 4,214.17 (2025 close)
    2026-01-30 : KOSPI 5,224.36 (Approx +24% since early year section)
    2026-02-02 : Black Monday (-5.26%) / Sell sidecar
    2026-02-03 : Sharp rebound (+6.84%) / Buy sidecar
    2026-02-04 : Close 5,371.10 / VKOSPI 50 line / Samsung Electronics market cap ₩1000T
    2026-02-05 : Plunge (-3.86%) / Foreign all-time net sell / VIX surge
    2026-02-06 : Additional decline (-1.44%) / Sell sidecar re-trigger
    2026-02-09 : Rebound (+4.10%) / Foreign net buy turn
    2026-02-11 : 5,354.49 / VKOSPI rapid calming (upper 30s)
    2026-02-12 : Intraday touching 5,500 line (ongoing)

References

• KOSPI 2025 year-end close (4,214.17) and annual settlement reports (government/media)
• KOSPI index daily closes and change rates (1/12~2/12 section public time series)
• VKOSPI (KOSPI200 volatility index) surge and early February figures (47~52 range) reports/time series
• VIX (U.S. volatility index) daily closes (FRED/public time series) and February 5 surge (21.77) section
• Sidecar trigger notices (2/2 sell, 2/3 buy, 2/6 sell) and trigger conditions (futures -5% sustained 1 minute, etc.)
• 2/2 ‘Black Monday’ (KOSPI -5.26%) and exchange rate surge, Warsh shock reports
• Gold/silver plunge (margin call/leverage liquidation) and Warsh shock-related reports and analysis
• 2/5 plunge and foreign all-time largest net sell (about ₩5T) reports
• 2/9 rebound (KOSPI +4.10%) and foreign net buy turn, supply-demand figures reports
• 2/10~2/11 supply-demand (foreign/institutional joint buying) and exchange rate decline reports
• 2/12 intraday touching 5,500 line reports (all-time high renewal)
• U.S. monetary policy (January FOMC rate hold) and 2026 FOMC schedule (Fed)
• Korean monetary policy (1/15 base rate 2.50% hold, Bank of Korea)
• KOSPI top 10 stock weight/market cap reshuffling and semiconductor concentration reports
• Earnings upgrades (consensus changes) research summaries (concentrated in top few stocks)
• KOSPI P/E and other index valuation snapshots (securities firm session close comments)