/South Korean stocks had their best year in more than a decade in 2020. Here’s what drove them higher

South Korean stocks had their best year in more than a decade in 2020. Here’s what drove them higher

A currency dealer, wearing a mask to avoid the spread of the coronavirus disease (COVID-19), works in front of electronic boards showing the Korea Composite Stock Price Index (KOSPI) at a bank in Seoul, South Korea, September 10, 2020.

Kim Hong Ji | Reuters

Investors who stuck with South Korean stocks through 2020 were handsomely rewarded.

The Kospi index, South Korea’s stock-market benchmark, rallied 30.8% for the year, its biggest annual jump in more than a decade. The iShares MSCI South Korea ETF (EWY) rose 38.4% in 2020, outperforming most developed and emerging markets. The ETF’s year-to-date gains top those of other widely followed emerging markets as well as the S&P 500 in the U.S.

South Korea’s strong equity market returns came as the country’s health response to the coronavirus pandemic — along with fiscal and monetary stimulus measures already in place — kept its economy from missing a beat for most of 2020.

“In South Korea, you have this combination of good health public policy together with plenty of [economic] policy support,” said Mehran Nakhjavani, partner and emerging market strategist at MRB Partners. “The timing of it all was fortuitous.”