Weak stock market puts South Korean president under pressure

South Korean investors faced another difficult start to the week as the benchmark Kospi index closed down 3.12% on Monday. The decline was particularly sharp for major chip manufacturers Samsung Electronics and SK Hynix, whose stock prices suffered significant losses.

The downturn has fueled investor nervousness, especially considering the Kospi's substantial drop of over 25% since June 22, when it stood at 9,114.55 points. While the index remains more than double its value from a year ago, this offers little comfort to retail investors who have recently entered the market.

The market's volatility appears to be impacting President Lee Jae-myung's political standing. On the same day the Kospi declined, news agency Yonhap reported that his approval ratings had fallen to a new low of 40.2%. This marks a 2.8 percentage point decrease from the previous week.

While surveys cite measures against high housing prices and a controversy over judicial appointments as primary reasons for the dip in Lee's popularity, there's a perceived correlation between his approval ratings and the stock market's performance. Earlier in the year, Lee was lauded for sparking a market boom, but recent reports, such as one from the right-leaning Chosun Ilbo, have seen Korean retail investors blaming him for the volatility. The newspaper quoted Francis Tan, Chief Strategist for Asia at Indosuez Wealth, stating, "The current situation presents considerable difficulties for the government."

President Lee had pledged during his June 2025 election campaign to double the Kospi's value within his five-year term. While the index has indeed more than doubled from its value at the time of his election, the recent downward trend is causing concern, especially as many households have recently invested in the stock market.

“

The current situation presents considerable difficulties for the government.