"When the market reopens after the Chuseok holiday, will stocks rise or fall?"
Ahead of every Lunar New Year and Chuseok holiday, a familiar piece of advice circulates among brokerages in Seoul's Yeouido financial district and retail investors: sell your stocks and hold cash before the holiday. The reasoning is that if overseas markets swing wildly or unexpected bad news breaks during the long break, there is nothing investors can do. Attached to this is a so-called holiday playbook: buy cheaply when prices drop before the holiday, then sell into the relief rally that follows.
This year, however, the domestic market climbed ahead of Chuseok rather than settling into the usual wait-and-see mode. The KOSPI closed at 7,080.92 on the 23rd, up 0.90%, bringing its gain over the five trading days before the holiday to 5.4%, according to the Korea Exchange on the 24th. With the index having settled above the 7,000 level heading into the break, investors are now focused on what happens immediately after. Hopes that the market will extend its autumn rally are running up against caution that the sharp short-term gains could trigger a wave of profit-taking.
So how has the KOSPI performed after past holidays? The Seoul Economic Daily examined all 21 Lunar New Year and Chuseok holidays from January 2016 through the run-up to Chuseok 2026, measuring the index's moves over the five trading days before and after each break. The review found that markets more often responded with relief than with the feared selloff, with gains outnumbering declines.
Over the past decade, the KOSPI rose an average of 1.07% in the five trading days following a holiday. Twelve of the 21 cases, or 57.1%, ended higher. Looking only at the first session after the break, the index rose 14 times, or 66.7% — roughly two out of every three. The pattern suggests a relief rally, in which money parked in cash by investors reluctant to hold stocks through a long break returns to the market as soon as trading resumes.
The win rate was even higher when prices had already climbed just before the holiday, as they did this year. In the 14 cases where the index gained over the five trading days before a break, the average return over the following five sessions was 1.42%, above the overall average. Of the 21 holidays, eight, or 38.1%, saw a pre-holiday advance extend into a continued rally afterward, while six, or 28.6%, reversed lower.
Around Chuseok in 2017, the KOSPI rose 0.2% in the five trading days before the break and added another 3.6% in the five sessions after. At Chuseok in 2019, a 3.1% pre-holiday gain was followed by a further 2.1% advance. At Chuseok in 2025, a 2.3% gain before the break gave way to a 5.6% rally afterward.
Still, the pattern is no guarantee. In the nine cases, or 42.9%, where the index fell in the five sessions after a holiday, the culprit was a black-swan event abroad while Korean markets were closed. Fears over COVID-19 spread during the 2020 Lunar New Year break sent the KOSPI down 5.67% afterward, and at Chuseok in 2021 the index slid 2.55% amid the fallout from China Evergrande Group's default crisis. At Chuseok in 2022, a shock U.S. consumer price index reading drove a 1.20% decline, and at Lunar New Year in 2016 the index dropped 1.77% as a North Korean missile launch coincided with the shutdown of the Kaesong Industrial Complex.
"Semiconductor leaders and institutional buying pushed the index back above 7,000 just before Chuseok, so the technical rebound momentum is still intact," an industry official said. "Unless a major shock emerges during the break from something like the U.S.-China summit or the situation in the Middle East, the market will likely attempt further gains after the holiday as uncertainty clears."
