Korean stocks have surged significantly, with the KOSPI index rising from around 2,000 in May last year to briefly breaking 9,000 this year, currently hovering around 7,000—still 2-3 times higher than last year. This rally, combined with large-scale performance bonuses in the semiconductor sector and an influx of foreign tourists due to the weak won, has fueled expectations of a wealth effect boosting domestic consumption. The number of ultra-high-net-worth individuals in Seoul (≥$30 million in assets) reached 6,220, up 36.3% year-over-year according to an Altrata report released June 22 (local time), the highest growth rate among surveyed cities. Department stores are seen as key beneficiaries, positioned to capture both increased spending by wealthy domestic consumers and rising foreign tourist shopping demand.
KOSPI Rises from 2,000 to 9,000 as Investor Assets Expand
According to the financial investment industry on the 3rd, the domestic asset market atmosphere is completely different from last year. The KOSPI, which hovered around the 2,000 level until May last year, surged sharply this year, at one point breaking through the 9,000 mark. The index has since corrected to around 7,000, but remains 2-3 times higher than last year. The stock price increase has significantly expanded investors' valuation assets. Combined with performance bonuses from improved corporate earnings, an environment has been created where financial assets and earned income are increasing simultaneously. The market is paying attention to the possibility that this change will lead to the representative wealth effect that stimulates consumption sentiment.
Seoul Ultra-High-Net-Worth Individuals Reach 6,220, Up 36.3% Year-Over-Year
The improvement in asset markets and the real economy together is rapidly increasing the number of wealthy individuals in Korea. According to a report released June 22 (local time) by asset information analysis firm Altrata, Seoul ranked 12th among the world's 12 major cities with the most ultra-high-net-worth individuals (net assets of $30 million or more, approximately 40 billion won), recording 6,220 people. Notably, Seoul's ultra-high-net-worth individuals increased 36.3% from the previous year, showing the highest growth rate among surveyed cities. The same trend is confirmed in domestic securities firm customer data. Recently, not only are existing wealthy individuals' assets growing, but new high-net-worth individuals are rapidly increasing based on stock valuation gains.
Mirae Asset and Samsung Securities Report Surge in High-Net-Worth Clients
Mirae Asset Securities announced on June 23 that the number of high-net-worth customers holding financial assets of 3 billion won or more among its clients was approximately 9,500 as of the end of last month. This is an increase of more than 200% compared to the 3,000 level in May last year. The month-over-month growth rate also reached 26%. Samsung Securities also shows a steep increase. Samsung Securities stated that as of June 29, individual customers with 3 billion won or more recorded 10,645 people. This increased approximately 81.6% from 5,862 people at the end of last year, the first in the industry to exceed 10,000 people.
Analysts Maintain Buy Ratings on Lotte Shopping and Hyundai Department Store
The market sees a high possibility that the increased financial assets will lead to actual consumption. This is because when asset values rise, a psychological effect appears that consumption capacity has expanded, and spending tends to increase centered on luxury goods, fashion, and premium consumer goods. With the expansion of shopping demand from foreign tourists due to the weak won, expectations for improved performance in the department store industry are also growing. Securities firms view department stores as one of the biggest beneficiary sectors of this change, as they have a business structure where increased consumption by wealthy individuals and increased foreign sales can occur simultaneously.
Baek Jae-seung, researcher at Samsung Securities, maintained a target price of 230,000 won and a 'buy' opinion on Lotte Shopping, stating "the wealth effect and increased foreign sales are steadily appearing centered on large stores, and profitability is continuously improving as not only luxury goods but also fashion sales growth rates are notable." Regarding Hyundai Department Store, he also presented a target price of 250,000 won and a 'buy' opinion, saying "department store sales, which were sluggish until the first half of last year, showed a recovery from the second half of last year thanks to the wealth effect from strong exports and increased inbound demand, and entered a growth phase this year."
FAQ
What caused the surge in Korean stocks this year?
The KOSPI index rose from around 2,000 in May last year to briefly breaking 9,000 this year. The surge was driven by improved semiconductor sector performance, large-scale performance bonuses at major companies like Samsung Electronics and SK Hynix, and strong export performance. The index has since corrected to around 7,000 but remains 2-3 times higher than last year.
How many ultra-high-net-worth individuals are in Seoul?
According to an Altrata report released June 22 (local time), Seoul has 6,220 ultra-high-net-worth individuals with net assets of $30 million or more (approximately 40 billion won). This represents a 36.3% increase from the previous year, the highest growth rate among the world's 12 major cities surveyed.
Why are department stores expected to benefit from the wealth effect?
Department stores are positioned to capture both increased spending by wealthy domestic consumers and rising foreign tourist shopping demand due to the weak won. Analysts at Samsung Securities maintain 'buy' ratings on Lotte Shopping (target price 230,000 won) and Hyundai Department Store (target price 250,000 won), citing improved profitability from luxury goods and fashion sales growth.
