Riding the momentum after topping the 5,000 mark at the start of the year, the KOSPI index has reclaimed the 6,000-point plateau, staging an unprecedented bull run. Brokerages are leaning toward further gains in the index.
As the global artificial intelligence (AI) industry grows rapidly, profits in semiconductors—the core of our industrial base—have surged, and the government's market-boosting policies to prevent duplicate listings and encourage dividends are easing the chronic undervaluation of the Korean stock market, the so-called "Korea discount."
Heads of research at 11 major domestic brokerages said the KOSPI still has room to rise even after breaking 6,000. In an emergency survey by ChosunBiz, most research chiefs assessed the current bull market as a "full-fledged rally," not a "short-term overheating."
Kim Dong-Won, head of research at KB Securities, said, "Considering the advancement of Korea's flagship industries and upward revisions to earnings estimates, the index has the potential to rise further." KB Securities has already projected since late last year that the KOSPI could climb to the 7,500 level.
Lee Jong-hyung, head of research at Kiwoom Securities, also said that under a positive scenario the KOSPI could rise as high as 7,300 points, while Yoo Jong-woo, head of research at Korea Investment & Securities Co., set the top end of this year's KOSPI at 7,250 points.
Some warn of the possibility of a steep correction following a short-term surge. But many research heads agreed there is ample support for further gains, as the core driver of this rally is the solid fundamentals of "earnings improvement."
Yoon Sok-mo, head of research at Samsung Securities, said, "Based on the KOSPI 200, this year's operating profit estimate has been revised up 37% from the end of last year to 562 trillion won," adding, "The earnings momentum led by semiconductors is at a level hard to find in other stock markets, and the recent market rise can be explained by earnings improvement."
Park Yeon-joo, head of research at Mirae Asset Securities, also said, "Expectations for listed companies' earnings improvement are working positively, making it likely the market strength will continue," adding, "MoneyMove into the stock market in line with the government's policy stance is also positive."
Kim Hak-kyun, head of research at Shinyoung Securities, said, "I do not judge the current share price rise to be a bubble," adding, "Expectations for improvements in listed companies' governance have served since last year as the biggest 'primer' for the market, and at the same time, earnings improvement in memory semiconductors is overwhelmingly acting as the driver of market gains."
While semiconductor-led earnings recovery and market activation policies have lifted the KOSPI and moved it into a phase of resolving the "Korea discount," there is still a long way to go before reaching a "Korea premium," where global investors rate the Korean market highly.
Hwang Seung-taek, head of research at Hana Securities, said, "Right now, the market is rising because corporate earnings are increasing; it's not that market valuation has gone up," adding, "If policies emerge that can raise our market's valuation and more funds flow into equities, we can expect a valuation lift."
For now, a strong rally continues, but if debate intensifies over the sustainability of AI investment and U.S. monetary policy tilts toward tightening, volatility in our market could increase. Kim Hak-kyun said, "Without exception in recent years, when share prices fell, U.S. long-term Government Bonds moved nervously," adding, "If concerns about U.S. inflation grow and long-term rates rise, it could trigger a market correction."
Yoon Chang-yong, head of research at Shinhan Investment & Securities, said, "There is a possibility that U.S. big techs will delay IT and semiconductor-related capital expenditures (CAPAX), and a phase may come when semiconductor supply expands," adding, "Such an environment could provide a pretext for a market correction."