KB Securities said on the 6th that the current situation has entered a bull market for the first time in 40 years since the mid-1980s "three lows" boom (low interest rates, low oil prices, and a low dollar).
KB Securities presented 5,000 as the base scenario for the KOSPI in 2026 and said it could rise to 7,500 under a long-term bull market scenario.
Kim Dong-Won, head of research at KB Securities, said, "As the price-to-book ratio (PBR; market capitalization ÷ net worth) multiple is rapidly expanding in line with the 'three lows' boom, operating profit of KOSPI-listed companies in 2026 is expected to reach a record high of 401 trillion won, up 36% from this year."
The KOSPI's current PBR is 1.4 times, 60% lower than the global market average of 3.5 times and a 37% discount even to the Asia average. KB Securities said that because the KOSPI market remains undervalued, it could stand out as an attractive investment destination for global investors.
KB Securities also judged that the expansion of the artificial intelligence (AI) industry is only just beginning and that it is premature to compare it to the 1999 dot-com bubble.
KB Securities said the market environment and corporate fundamentals are different as well. Unlike in 1999, when the United States entered a rate-hike cycle and implemented tightening policies by maintaining a federal budget surplus, current policy is accommodative in both currency and fiscal terms. Also, unlike in the dot-com bubble, when related firms had an average price-to-earnings ratio (PER; market capitalization ÷ net income) of 60 times, the current level is 30 times, or about half.
Kim said, "AI is the third industrial revolution after PCs (the internet) and mobile (the iPhone)," adding, "PCs and mobile industries maintained high growth for 10 to 15 years after their emergence, but for AI, only three years have passed since GPT was unveiled."
KB Securities noted that there may be short-term corrections, but based on past cases, the market has rebounded sharply afterward. Kim said, "In the three bull markets of the past 30 years in the Korean stock market (1998, 2009, 2020), the KOSPI's average correction magnitude and duration were -14% and about one month, respectively," adding, "In particular, in the 1998–1999 bull market, after a short-term -22% correction, the KOSPI nearly doubled."
KB Securities picked semiconductors, nuclear power, defense, and securities as strategic sectors. Its top picks were Samsung Electronics, SK hynix, Doosan Enerbility, Korea Electric Power Corporation, Hyundai E&C, Hyundai Rotem, and Korea Investment Holdings.