Synopsis South Korea's Kospi market surge has fueled a luxury goods boom, with teenagers and young adults leading the spending spree. Pent-up consumer desire, coupled with limited real estate and overseas travel options, is driving this trend. However, concerns remain about potential consumption contraction if the market declines.ANISouth Korea’s Kospi has emerged as the shining star among all stock markets so far this year, skyrocketing to fresh lifetime highs last week while Dalal Street and other markets crashed. As investors minted massive sums of money from the K-Street, demand soared for luxury goods like Rolex watches, Bentley cars and more.The “wealth effect” resulting from the surging stock market has most visibly spilled over to ultra-premium consumer goods, including department store luxury items, jewelry, accessories and watches, according to a report by Seoul Economic Daily, which quoted experts as saying that the wealth effect could multiply as the share of financial assets structurally rises.“Cartier's popular D'Amour line draws so many visiting customers that store staff are recommending online purchases to disperse demand," a department store official was quoted as saying by the report. Several department stores reported a surge in demand for luxury items.Heightened demand was also seen for high-end restaurants and luxury resorts. Registration of Tesla models priced above 100 million won multiplied more than 10x this year to 1,599 units, while those of Bentley more than doubled to 139 units, the report said.Who is leading the luxury buying spree?Interestingly, teenagers seemed to lead some of the soaring demand. According to Lotte’s Department Store, the sales growth for luxury items among teenage customers skyrocketed 150% between the beginning of this year and the 13th of this month, the highest among all the age groups. According to another department store quoted by the report, the luxury sales growth among VIP customers in their 20s this year stood at 31.4%, the steepest across all age groups except for those in their 40s.Why are people buying luxury items?“When people make money in the stock market, they usually buy real estate or travel abroad, but this year real estate buying has been constrained by government policy, and overseas travel demand has fallen due to the Middle East war," a department store official was quoted as saying by Seoul Economic Daily. "Pent-up consumer desire with nowhere to go is exploding in the domestic premium consumption market,” he added.Financial assets are easier and faster to liquidate than real estate, so they have a more direct impact on consumption…The psychological wealth effect is being maximized, driving high-end consumption such as fashion and luxury goods," said Suh Jung-yeon, a researcher at Shinyoung Securities, as quoted by the report.While people flock to luxury stores with money made from the rallying stock markets, Kwak Beop-jun, head of the macroeconomic analysis team at the Bank of Korea's Economic Research Department, expressed concern. “Investors take losses more seriously than gains of the same amount, so consumption could contract more sharply than it expanded," he said. "In particular, discretionary spending is highly volatile, which means a future stock decline could amplify overall economic volatility,” he was quoted as saying by the report.South Korean markets have seen a sharp consolidation after scaling fresh peaks last week. Up until Thursday, the index was up a staggering 90% in 2026 alone, led by the AI boom. It has, however, declined over 3% in the past five days.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price...moreless(You can now subscribe to our ETMarkets WhatsApp channel)Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price...moreless