Long before propelling the South Korean stock market to become one of the world's hottest, President Lee Jae-myung was a novice retail investor in his thirties, losing money month after month. Decades later, now serving as the nation's leader, Lee remains preoccupied with those early losses. This fixation does not stem from a belief in his own trading prowess—he admits to being overly impulsive. According to interviews with more than six individuals close to Lee, many of whom requested anonymity to discuss private conversations, what truly lingers is a persistent sense that those losses were exacerbated by unfair practices where controlling shareholders enriched themselves at the expense of ordinary investors.

This long-simmering frustration has driven Lee to enact sweeping financial reforms since taking office last June. These measures include establishing rules to create a fairer environment for all shareholders and strengthening board accountability mechanisms. In turn, these policies have ignited the strongest global equity rally, with gains surpassing Lee's campaign pledge of "Kospi 5000." This ambitious index target was intended to signal his resolve to reshape South Korea's economic model and address the Kospi's status as one of the most undervalued major markets globally. Last Friday, the Kospi closed at 5,809 points, marking a 38% year-to-date increase and a 115% surge since Lee's inauguration.

Oh Gi-hyoung, a lawmaker from the Democratic Party who co-heads the special committee for Kospi 5000—recently renamed the K Capital Market Committee—stated, "The pace of the increase has been far quicker than we expected." The rapid ascent has bolstered confidence among officials at the presidential Blue House that if one goal can be achieved so swiftly, others may also be within reach. Lee's administration is intensifying efforts to manage an overheated real estate market and eradicate market manipulation.

The market boom has somewhat cast Lee as a folk hero among South Korea's 14 million retail traders, locally known as "ants." These individual investors have cheered the Kospi's surge, which has even boosted Lee's approval ratings and provided a sense of stability for a nation still recovering from a constitutional crisis a year ago that led to the ousting of the former president. Sources close to Lee describe him as a pragmatist who views the stock market as the quickest way to jumpstart the economy. Early indications suggest this is occurring: consumer confidence and spending have shown modest increases alongside the Kospi's rise.

More significantly, the bull market is compelling South Koreans to reassess their longstanding obsession with real estate. For decades, many viewed property as the primary path to wealth, with it comprising nearly three-quarters of household assets. Peter S. Kim, a global investment strategist at KB Securities Co., noted, "The excessive concentration in real estate ownership rather than financial assets is poised for a reversal." He described this shift as "one of the most profound trends in South Korea over the next decade."

Analysts caution that Lee's reforms are only partially responsible for the Kospi's rally. They point out that the global artificial intelligence boom has driven up numerous South Korean tech stocks, including Samsung Electronics Co. and SK Hynix Inc., over the past year. Mixo Das, JPMorgan Chase & Co.'s head of equity strategy for Korea, remarked, "Lee's reforms are important and certainly help improve valuations, but attributing the Kospi's rise to 5,000 points solely to government policy likely overstates their impact."

Many economists state they need more evidence to confirm that the stock market gains are genuinely boosting economic growth. Without spillover effects into the real economy, even members of Lee's own party worry that his focus on equities could backfire. They emphasize that Lee must demonstrate he is enabling all South Koreans, not just the wealthy, to share in greater prosperity by addressing inequality. The nation's households carry one of the highest debt burdens globally, a problem largely stemming from soaring apartment prices that Lee himself has labeled a "ticking time bomb." Furthermore, decades of export-led growth have made the economy highly sensitive to global demand shocks, making the wealth effect from stock market gains even more critical.

During a cabinet meeting last month, Lee declared that South Korea's long-undervalued capital markets are "being reestablished as a solid foundation for future innovative industry growth and the healthy accumulation of national wealth." In a statement to Bloomberg News, the presidential office affirmed it is enhancing trust in the stock market by curbing market manipulation and promoting long-term investment.