South Korea's GDP Grows by 1.0%, but KOSPI Index Continues to Decline

The Bank of Korea reported on October 27 that the country's GDP grew by 1.0% quarter-on-quarter in Q3 2026, more than triple the forecast of 0.3% made in August. Meanwhile, KOSPI fell by 8.5% over three months, according to TradingView.

Growth was driven by exports of semiconductors, machinery, and electrical goods: exports increased by 2.3%. Capital investments rose by 4.1% due to purchases of machinery and equipment for chip production. Private consumption fell by 0.2% – households did not contribute to the growth. Real GDP increased by 3.4% year-on-year after 3.7% in Q2: the economy has been growing for the third consecutive quarter.

Samsung Electronics and SK Hynix, which account for about half of the index, are behind both the export boom and the sell-off. Goldman Sachs on October 25 lowered the KOSPI target from 12,000 to 9,000. According to the bank, the market is pricing in a 65% drop in chip sector earnings in 2027, and Goldman considers such a scenario overly pessimistic.

October exports reached a record $115.3 billion, with chips accounting for $56.4 billion – about 49%. Total exports exceeded $900 billion for the first time; the Ministry of Trade suggests that $1 trillion may be reached as early as November. Only the US, China, and Germany have reached such a level.

The Bank of Korea kept the rate at 3.00% in October, although the chip boom leaves room for a hike in November. Tightening would hit an economy where private consumption has already fallen. Since chips accounted for about half of October's exports, a cooling memory market would simultaneously affect trade, investment, and KOSPI. GDP data shows that the cycle is still boosting output, while the index trades as if the rise is about to end.