- This article discusses what has made the KOSPI the best stock market in January 2026. Does it have the capacity to carry this further?
What has been the best stock market in January 2026? Without a doubt, the South Korean stock exchange is the one leading the pack, heading into the final third of the month’s trading sessions. January 2026 has delivered a clear risk-on narrative, prompting a rotation of flows into global equities. The momentum clearly lies with Asian equities, as AI/semiconductor stocks have shown some clean outperformance. On the flip side, stock markets in developed economies have shown a mixed picture, as US President Trump’s actions have sparked geopolitical-driven risk-off moments.
The Best Stock Market in January 2026: South Korea’s KOSPI Exchange
The KOSPI is South Korea’s national stock market. It has delivered the strongest returns among global equities this month, with gains approaching 16.5%. This rally, coming on the back of an exceptional 2025 financial year, has been driven largely by strength in AI and semiconductor stocks. This demand has been backed by policy that is driving better governance, reducing political and security risk premia,, and providing support for company multiples.
Live Chart
The KOSPI snapped a 12-day rally on Tuesday, 20 January 2026, shedding 0.39%. However, the exchange recovered all the losses of the previous day and then some, gaining 0.49% as of writing. This move has sent the KOSPI into record territory.
Best Stock Market in January 2026: Macro Drivers
What is driving the bullish performance of the KOSPI in January 2026?
- AI/semiconductor demand
- Governance re-rating
- Global dispersion
1. AI/semiconductor demand
Asian markets have the highest exposure to semiconductor assets. The strong inflows into AI stocks have boosted the KOSPI as investors continue to make bullish bets on expanded AI capital expenditure and robust earnings.
2. Governance re-rating
The KOSPI’s rally has been described as driven by structural re-rating from government policies, not just cyclical returns. The Corporate Value-Up program launched by the South Korean government focuses on boosting shareholder value, enhancing corporate governance, and improving the Price-to-Book ratio to attract foreign investment.
3. Global Dispersion
Investment flows are now dispersing globally in the search for performing markets. Seasoned alpha trader Nicholas Vardy once said, “there is always a bull market somewhere.” As many risk assets take a hit due to renewed trade policy threats from the current US administration, developed markets are turning mixed, while their Asian counterparts are attracting new interest. The current environment rewards markets with stronger internal momentum and structural catalysts. Clearly, the KOSPI is benefiting from this narrative as the government implements reforms that are leading to value re-rating.
Best Stock Market in January 2026: Technical Outlook
What does the technical outlook for the best stock market in January 2026 say? The setup below indicates what could lie in wait as the year unfolds.
The KOSPI is in a strong uptrend, as prices have been printing higher highs and higher lows since July 2025. The most recent push higher has a strong impulse following the breakout from the bullish pennant, which confirms sustained bullish pressure.
With the market now breaking out of the pennant consolidation, the chart suggests a measured expansion of 24% or 993 points. This gives the breakout move some room for further northside expansion, targeting the 5200-5400 extension band. As long as the price remains above the 4600-4700 initial pullback demand zone, this bullish case scenario holds.
On the flip side, a retracement towards 4650-4450 would remain constructive as a test of the breakout structure. Only a sustained break of the 4450 lower support band signals a loss of trend momentum, opening the path towards the 4000-3900 region. If this bear case scenario is sustained, deeper selling could unveil the next support at 3088.