South Korean President’s Big Bet on Stocks Risks Backfiring

President Lee Jae Myung’s 2025 election victory hinged on a bold pledge to transform South Korea’s stock market into a wealth engine for households, positioning equities as a core economic growth driver. The strategy initially succeeded, with markets surging through early 2026, boosting retail investor confidence and household portfolios amid aggressive government-backed reforms and incentives. Critics now warn the rally’s rapid pace risks overvaluation, with corporate earnings failing to match stock gains, raising fears of a speculative bubble fueled by policy rather than fundamentals. Household debt levels, already high, have climbed further as citizens leverage loans to chase market gains, exposing financial stability risks if sentiment reverses abruptly. Analysts question whether the gamble can sustain long-term prosperity or if short-term political wins will collapse under economic pressure, testing Lee’s economic legacy before midterm elections.