Major domestic securities firms said the KOSPI index in the new year will climb to the uncharted 5,000-point level. As earnings of domestic listed companies improve sharply, led by semiconductors, analysts said Korea's stock market will be re-rated and rapidly emerge as an attractive market drawing global investors. Growing global liquidity also appears set to serve as a tailwind supporting a market rise.
Experts picked artificial intelligence (AI) as the most important theme to watch in the new year's stock market. They said the "AI revolution," which is changing the paradigm of the global IT industry, will spread across the board beyond semiconductors and power infrastructure to real-economy fields such as robots, automobiles, and aerospace.
ChosunBiz compiled 2026 market outlooks from major securities firms and found that many forecast a KOSPI break above 5,000. Notably, KB Securities offered a bold view that "the KOSPI has entered a new bull market for the first time in 40 years since 1985," and said the index could soar to 7,500 points under a long-term upswing scenario. NH Investment & Securities also projected the KOSPI would rise to the 5,500 level.
◇ Bull market expected as liquidity, earnings, and valuation align
Experts expect the domestic market to strengthen in the new year as three factors—liquidity, earnings, and valuation—line up together.
First, global liquidity is in an expansion phase. As Central Banks maintain accommodative monetary policy to boost sluggish economies, governments are also running expansionary fiscal policies. With abundant cash flowing into equities, the market is expected to remain strong this year as well.
Expectations are also high for listed-company earnings to improve. According to Mirae Asset Securities, helped by strong performances from Samsung Electronics and SK hynix, operating profit in the semiconductor sector is expected to jump more than 80%, from 82 trillion won in 2025 to 148 trillion won in 2026.
Kim Dong-Won, head of research at KB Securities, said, "Considering the inflection points in the global IT industry over the past 40 years, AI is judged to be the third industrial revolution after PC (internet) and mobile (iPhone), and the PC and mobile industries sustained high growth for 10 to 15 years after their inception. However, only three years have passed since GPT was released in Nov. 2022, and given that the AI expansion cycle is only just beginning, comparing the AI industry to the dot-com bubble is seen as an unrealistic view."
Excluding semiconductors, operating profit of listed companies is also projected to increase 22%, from 205 trillion won to 249 trillion won. The reason the KOSPI set a new record high and showed strength in the second half of 2025 was ultimately because the improvement in listed-company earnings was clear, and in the new year, the earnings growth rate and earnings momentum of domestic corporations are expected to far exceed the averages of major countries.
With ample cash in the market and listed-company earnings improving, a re-rating of valuations is seen as key for the KOSPI to achieve the milestone of breaking through 5,000 points. Even for the same corporations, stock prices vary depending on how investors assess them, and the fact that investor perceptions of Korean stocks are changing recently could work positively.
Behind this change are government policies to revitalize the market. As institutional reforms such as separate taxation of dividend income, amendments to the Commercial Act, and tax support for long-term investment move forward, expectations are growing for a re-rating of Korea's price-to-book ratio (PBR). Kim Jong-min, senior research fellow at Samsung Securities, said, "With policy support, Korea's stock market is entering a phase of structural re-rating."
Samsung Securities recommended, among AI-related names, Samsung Electronics, SK hynix, Samsung Electro-Mechanics, Doosan, ISU Petasys, Korea Electric Power Corporation, HD Hyundai Electric, Hyundai Motor, LG Electronics, and ROBOTIS as picks, and also recommended Samsung Bioepis Holdings, ABL Bio, OliX Pharmaceuticals, HD Hyundai Heavy Industries, HYBE, and APR Co. as stocks with growth potential.
With the KOSDAQ market relatively more undervalued, some say KOSDAQ has stronger investment appeal. Cho Su-hong, head of research at NH Investment & Securities, said, "KOSDAQ lagged somewhat last year, but the fundraising environment will improve this year thanks to productive finance policies and inflows into the Public Growth Fund," adding, "Investment appeal will especially rise in bio and venture sectors." NH Investment & Securities said the KOSDAQ index could rise to 1,100 points in the new year.
◇ "In the second half, portfolios need to be adjusted toward domestic demand and dividend stocks"
However, as the year moves into the second half, risk factors may increasingly come to the fore. With the U.S. Federal Reserve's rate-cut cycle ending and U.S. midterm elections taking place at year-end, and with issues such as the expiration of U.S.-China tariff exemptions overlapping, volatility could widen toward year-end. If inflation fears resurface, the burden of worsening profitability for corporations could grow.
Yoo Myung-gan, a researcher at Mirae Asset Securities, said, "As index levels rise, phases in which market volatility could expand depending on macro variables—such as a rekindling of U.S.-China tensions, the AI bubble debate, entrenched inflation, and continued won weakness—may occur frequently."
The "weak won" (a rise in the won-dollar exchange rate), which has emerged as an important variable for the domestic economy and stock market, is likely to continue as a trend for the time being. Experts said the 1,400 won level for the won-dollar rate will become the "new normal." A weak won can increase profits for export-oriented corporations, but it has become a "double-edged sword" that could weigh on foreign capital inflows into the domestic market.
Lee Kyung-min, a researcher at Daishin Securities Co., advised, "If the KOSPI corrects below 3,800 points, investors need a strategy of actively increasing exposure with the KOSPI 5,000 era in mind," but added, "In the second half, while watching monetary policy, reducing exposure to growth stocks and adjusting portfolios toward domestic-demand and dividend stocks is a strategy that can secure stability."