"Does the Market Always Rise After Chuseok? KOSPI Climbed 7 Out of 10 Times in 22 Years"

KOSPI rose 15 out of 22 times, averaging 1.34%
Pattern of "Weak Before, Strong After" Driven by Idle Funds
This Year, PCE and Micron Earnings to Set the Tone

The so-called 'Chuseok effect,' which suggests that stock prices tend to rise after the Chuseok holiday, has been corroborated by statistics. An analysis of the 22 Chuseok holidays from 2004 to 2025 shows that the KOSPI rose in 15 instances in the five trading days immediately following the holiday, representing a 68% probability of an increase. While the average return in the five trading days before the holiday was only -0.05%, it rebounded to 1.34% during the five trading days after the holiday.

On the 28th, the real-time KRW/USD exchange rate and KOSPI and KOSDAQ indexes are displayed on the electronic board in the dealing room of the Hana Bank headquarters in Jung-gu, Seoul. Photo by Yonhap News Agency

However, it is difficult to interpret this as an unconditional bullish signal for this year's stock market. Past statistics largely reflect a temporary normalization of supply and demand, driven by investment funds that had reduced their positions before the holiday returning to the market once trading resumed. This year, external factors such as the direction of U.S.-China trade relations following the summit, U.S. inflation and employment data, Micron's earnings, and foreign investor flows are expected to actually determine KOSPI's trajectory.

Minus 0.05% Before the Holiday, Plus 1.34% After

According to Korea Exchange on September 28, an analysis of KOSPI movements before and after the 22 Chuseok holidays from 2004 to 2025 shows that the average return in the five trading days before the holiday was -0.05%. The number of years with gains was 11 out of 22. In contrast, in the five trading days after the holiday, the average return was 1.34%, and KOSPI advanced in 15 instances, accounting for 68% of the total.

Narrowing the scope to recent years yields similar results. Over the past five years, from 2021 to 2025, the KOSPI fell by an average of 0.82% over the five trading days before the Chuseok holiday, but gained an average of 0.77% over the five trading days after the holiday.

Based on Korea Exchange data, in the five trading days immediately after Chuseok from 2001 to 2025, KOSPI rose 16 times and declined 9 times out of 25 instances. The average rate of increase during this period was 0.51%. The largest increase was 6.65% in 2004, and the largest decrease was 2.77% in 2018.

In the recent decade, from 2016 to 2025, the average return for the five trading days before the holiday was -0.49%, and the average return for the five trading days after was 0.68%. For the past five years, these figures were -0.82% and 0.77%, respectively.

However, post-Chuseok market gains have not been consistent every year. In 2018, KOSPI fell 2.77% in the five trading days after the holiday, and in 2022, it dropped by 3.84%. Although KOSPI rose by 2.74% on the first trading day after Chuseok in 2022, concerns about monetary tightening intensified after the U.S. August Consumer Price Index (CPI) exceeded market expectations, eventually causing the index to decline from 2,449.54 to 2,344.66.

Conversely, in 2025, KOSPI climbed from 3,610.60 to 3,748.89 in the five trading days following Chuseok, marking a 3.89% increase. At that time, optimism about policy—such as amendments to the Commercial Act under the newly inaugurated administration—coincided with improved results from major semiconductor companies.

Trading Volume Also Rises Again After the Holiday

It is believed that supply and demand dynamics influenced these patterns around the Chuseok holiday. Investors tend to scale back their positions in preparation for external uncertainties before a long holiday, and then reinvest standby funds once trading resumes, which lends strength to prices.

In fact, trading volume itself decreased before the holiday and then increased afterward. According to Korea Investment & Securities, the KOSPI’s five-day average trading value decreased from 10.7 trillion won to 9.9 trillion won before the holiday between 2021 and 2025, but increased to 11.6 trillion won after the holiday.

Experts saw the Chuseok effect as a short-term supply and demand factor, with only limited impact on the market’s mid- to long-term direction. They also emphasized that the decline in trading value before the holiday should not be interpreted as a fundamental shift in trend.

'End-of-Month and Start-of-Month Effect' Also Present

Another explanation for the post-Chuseok rally is the so-called 'end-of-month and start-of-month effect,' when stock returns on the last day of the month and first day of the following month are higher than usual.

A 2014 study by the Korean Association of Industrial Economics found that analysis of KOSPI 200 from January 1990 to December 2012 showed an average return of 0.4% on the last and first trading days of the month, while returns on all other trading days were close to zero.

However, this study’s analysis period is from years ago, and the effect is concentrated on only two days, so it is difficult to consider this the direct cause of the Chuseok rally. Furthermore, the first trading day this year is September 28, which is not a typical start-of-month period.

This Year, Micron and PCE Take Center Stage Over the 'Chuseok Effect'

This year, the post-Chuseok movement of KOSPI looks set to be affected more by global financial market variables than by the Chuseok effect. During the holiday, at the U.S.-China summit, both countries agreed to extend their trade truce until January 10, 2027. While the avoidance of renewed tariff clashes removes an element of uncertainty, key issues such as semiconductor export controls and the Taiwan dispute remain unresolved.

Domestic semiconductor stocks performed strongly ahead of the holiday. On the 23rd, Samsung Electronics closed 3.25% higher at 285,500 won, and SK hynix rose 1.20% to 1.86 million won. Foreign investors were net buyers of Samsung Electronics to the tune of 2.5972 trillion won from the 21st to the 23rd, although they were net sellers of SK hynix during that period.

The V-KOSPI200 index, which hit 97.99 in June, dropped to 42.98 by September 23. As market volatility eased from its highs, it remains to be seen whether foreign investors will continue to buy large-cap stocks, which is a key supply and demand variable for the market after the holiday.

However, immediate attention is focused on September 30. On this day, the U.S. August Personal Consumption Expenditures (PCE) price index and Micron Technology’s earnings will both be released. Market expectations are for a headline PCE increase of 3.7% and a core PCE rise of 3.4%. Micron’s revenue is expected to hover around 52 billion dollars, with earnings per share anticipated at 32.5 to 33 dollars. There is also keen interest in next quarter’s revenue guidance and whether profit margins can be maintained at around 86%.

On October 2, the U.S. September jobs report and South Korea’s September consumer price data will be announced. The market expects the U.S. September unemployment rate to stand at 4.1%, with nonfarm payrolls rising by 83,000. In August, nonfarm payrolls had increased by 162,000.

This content was produced with the assistance of AI translation services.