Investment & Market Trends

South Korea’s Kospi index is poised to deliver its largest first-half gain in 26 years, buoyed by a combination of renewed investor confidence and political clarity. The benchmark index has surged 27% in the first half of 2025, rising from 2,399.49 at the end of 2024 to 3,055.94 as of last Friday, according to data from the Korea Exchange. This marks the steepest first-half performance since 1999, when the Kospi soared 57% during the height of the dot-com rally. It also significantly outpaces the 5.4% increase recorded during the same period in 2024. Historic comparables include the 51% rise in the first half of 1987 and the 49% jump in 1986, both driven by favourable macroeconomic conditions such as a weak US dollar, low interest rates and declining oil prices. The Kospi has continued to rally into the final trading session of the half. Provided the index does not decline by more than 2.95% today, it will secure its best start to a year since 1999. A sharper fall would still mark the strongest first-half gain since 2009, when markets rebounded from the global financial crisis with a 23.6% rise. June has proven especially bullish, with the index gaining 13.2% in the month alone. The surge reflects optimism over newly elected President Lee Jae Myung’s market-friendly policy agenda. Pledging to revitalise capital markets and enhance corporate competitiveness, President Lee has set an ambitious goal of driving the Kospi to 5,000 points. However, concerns over market overheating are becoming increasingly pronounced. As of last Thursday, 10 stocks were labelled as an “investment risk” – the highest warning level under the Korea Exchange’s surveillance framework – compared to six at the same time last year. Designations of “investment alert” rose 55% to 175, while “investment caution” warnings climbed 27% to 1,176. In June alone, 30 stocks were tagged “short-term overheated”, up sharply from 11 in March. Analysts have cautioned that external pressures could further affect market dynamics. Washington recently extended a three-month grace period, until 9 July, on reciprocal tariffs targeting South Korean imports. This temporary reprieve is part of an effort to reach revised trade terms. Lee Kyoung-min, analyst at Daishin Securities, noted that the index’s proximity to record highs could amplify sensitivity to geopolitical and trade-related developments. “With the Kospi nearing an all-time high, upcoming noise from tariffs and political events could increase pressure for profit-taking,” he said. Lee Eun-taek, equity strategist at KB Securities, echoed similar concerns, warning that “tariff threats are highly likely to resurface, and while such risks are nothing new, the market is unlikely to remain unaffected – especially amid growing concerns over an economic slowdown”. The index breached the 3,000-point mark on 20 June for the first time in nearly three and a half years, and swiftly crossed 3,100 the following session. It is now approaching its record high of 3,305, reached in July 2021. Despite the mounting risks, market sentiment remains broadly positive. Many strategists anticipate further upside through the remainder of the year, particularly if corporate earnings momentum holds. Daishin Securities’ Lee Kyoung-min advised that in policy-driven sectors such as nuclear energy, finance and software, investors may benefit from waiting for a pullback. Conversely, undervalued sectors like semiconductors, autos and retail could offer opportunities amid ongoing capital rotation. Noh Dong-kil, strategist at Shinhan Securities, projected the Kospi could reach 3,400 by year-end, citing a potential valuation re-rating. “After the liquidity rally, earnings will become the key variable,” he said. “There’s a risk that third-quarter results may fall short of expectations due to weakening external demand. Only structurally growing stocks with low sensitivity to the economic cycle will be able to break through.” -ANN

Danantara Indonesia has announced a major capital injection into national flag carrier operator PT Garuda Indonesia, with an initial shareholder loan of 6.65 trillion rupiah to be channelled through PT Danantara Asset Management. The funding marks a significant step in the airline’s long-term business transformation, maintenance and fleet optimisation strategy. The state asset fund, which was mandated earlier this year to oversee Indonesia’s state-owned enterprises including Garuda Indonesia, disclosed that the capital support will be allocated for business optimisation, long-term funding, governance-driven assistance, and comprehensive performance restructuring. The total value of the funding package is projected to reach approximately US$1 billion. The first phase of the initiative will focus on maintenance and ensuring the operational readiness of aircraft belonging to both Garuda Indonesia and its low-cost subsidiary, Citilink. Subsequent stages will concentrate on optimising operational and financial performance in support of long-term business transformation. “The funding support reflects our mandate for transformation through a professional and measurable approach that prioritises the principles of good governance,” said Danantara Chief Operating Officer Dony Oskaria. He noted that the initiative builds on Garuda Indonesia’s restructuring process undertaken between 2021 and 2024, intended to secure long-term sustainability. According to Dony, the airline is entering a phase of accelerated improvement aimed at strengthening competitiveness and maximising asset utilisation. The initiative will be implemented under a governance framework aligned with international standards, including oversight by an independent financial controller and technical guidance from a global aviation industry expert. These measures are intended to ensure strict compliance with industry best practices. He further highlighted that the capital support aligns with broader national objectives to bolster domestic connectivity, drive tourism development, and establish Indonesia as a key aviation hub in the Southeast Asian region. Garuda Indonesia President Director Wamildan Tsani Panjaitan expressed confidence that the support from Danantara would reinforce the airline’s operational capacity and overall performance. “We believe that the success of performance improvement does not only depend on financial support, but also on the company’s commitment to reorganise overall operational and business strategy,” he said. Wamildan described the capital injection as a strategic opportunity to expedite performance enhancement and accelerate progress towards profitability. In the first quarter of the current fiscal year, the airline reported a 12.54% year-on-year reduction in net loss to US$75.93 million, despite ongoing costs associated with long-term restructuring. “With the corporate action from Danantara, we are projecting that 2026 will be a turning point for Garuda Indonesia. We are optimistic about recording positive net income,” Wamildan said at a press conference. Garuda Indonesia is targeting a fleet size of around 120 aircraft within the next five years, positioning itself for expansion and leadership in both the domestic and regional markets. As of March, the airline operated 98 aircraft. Deputy Industry Minister Faisol Riza confirmed in March that the carrier was preparing to place an order for up to 100 new aircraft this year from leading manufacturers such as Airbus and Boeing. The announcement, originally made by President Prabowo Subianto at the launch of Danantara, was tempered by acknowledgement of the challenges posed by global supply constraints and surging demand from other international carriers. -The Jakarta Post

Tata Capital Ltd has secured regulatory approval from the Securities and Exchange Board of India (Sebi) to move forward with its proposed initial public offering, which could raise approximately US$2 billion. This development positions the offering as potentially the largest listing on Indian exchanges in 2025, according to individuals familiar with the matter. The non-banking financial services subsidiary of the Tata Group is expected to launch the share sale as early as August, pending completion of preparatory activities. Sebi has formally communicated its approval to both the company and its appointed bankers, the sources confirmed. This regulatory clearance enables Tata Capital to incorporate Sebi’s feedback into its draft prospectus and begin engagement with potential investors. The proposed listing arrives at a time when India’s primary capital markets are showing renewed momentum. HDB Financial Services Ltd is also preparing to open a billion-dollar-plus offering, signalling increasing appetite for high-profile IPOs in the country. Tata Group is reported to be seeking a valuation of up to US$11 billion for Tata Capital, underscoring the strategic significance of the listing within the broader group portfolio. Representatives from Tata Capital and Sebi were not immediately available for comment. -Bloomberg