South Korea's Kospi index experienced a remarkable surge in 2025, outperforming major global markets with a 76% gain, driven by AI, defense, and K-beauty sectors. Analysts predict further growth in 2026. However, concerns linger regarding the sustainability of this rally, with potential challenges arising from weak economic growth, high debt levels, and the need for genuine reforms. The political landscape also saw significant shifts, with a new president taking office amidst past turmoil.