Boosted by strong semiconductor exports and a rally in the stock market, consumer confidence in South Korea reached a new high in February, the highest level since November last year.

Consumer confidence in South Korea significantly rebounded in February, reaching its highest level since November last year, mainly driven by strong semiconductor exports and a stronger domestic stock market. According to data released by the Bank of Korea on Friday, the composite consumer confidence index rose to 112.1 in February, not only significantly higher than in January but also continuing to remain above the neutral level of 100, showing that residents hold an optimistic outlook on the overall economic prospects. This reading is the highest since November last year. The improvement in consumer confidence is mainly due to an enhancement in the assessment of the current economic situation and a more positive outlook for future economic prospects. The recovery in market confidence reflects the continuous improvement in export momentum, especially strong performance in semiconductor-related exports, while the upward trend in the domestic stock market also provides significant support to the sentiment. In terms of the stock market, the benchmark KOSPI index in South Korea has risen by over double from a year ago, mainly driven by the strong performance of semiconductor heavyweights. The continuous rise in the stock prices of Samsung Electronics and SK Hynix has been a key force in driving the index higher. However, contrasting with the overall improvement in consumer confidence, there has been a significant cooling in sentiment related to real estate. The subindex measuring housing price expectations dropped to 108 in February, the lowest level since April last year, with a significant decline of 16 points from the previous month. Analysts believe that this change is closely related to recent real estate control measures implemented by the government, including measures to curb speculative housing demand and policy signals indicating the end of temporary tax incentives, such as the imminent expiration of the capital gains tax surcharge for multiple property owners. The diverging trend between the overall improvement in consumer confidence and the weakening expectations for real estate may help alleviate the central bank's concerns about financial stability. The cooling of housing price expectations is expected to curb leverage behavior in the household sector, thus reducing household debt risks. It is widely expected in the market that the Bank of Korea will maintain the benchmark interest rate at 2.5% unchanged at its policy meeting on Thursday. In its policy assessment in January, the Bank of Korea adjusted its monetary policy stance to be more neutral, citing reasons such as still high levels of household debt and lingering risks of exchange rate fluctuations. Although monetary policy is expected to remain on hold in the short term, analysts predict that against the backdrop of the continuous strong global demand for semiconductors driven by the AI wave, the Bank of Korea may raise its economic growth forecast for 2026 from the previously predicted 1.8% in November last year to 2.0%.