Global investment bank Morgan Stanley said the KOSPI, which has plunged more than 25% from its recent high, is nearing a bottom and kept its target at 9,000 points. However, it lowered its bear-case target to 6,000 points.
According to financial outlet Investing.com on the 21st (local time), Morgan Stanley wrote in its "Korea market strategy" report released the day before that several indicators suggest the KOSPI is nearing a bottom.
Morgan Stanley said the recent correction in the KOSPI index is deep but does not amount to a technical bear market. It analyzed that while the KOSPI index fell 18% this month, semiconductor stocks accounted for about 70% of the decline in the KOSPI's market capitalization.
That said, while keeping its KOSPI index target at 9,000 points, Morgan Stanley lowered its bear-case target to 6,000 points to reflect the possibility of slower earnings growth. It presented a 3–6 month expected trading range of 6,000–9,000.
This lowers the target it offered on the 23rd of last month. At the time last month, Morgan Stanley set its KOSPI target at 9,000 points and projected 10,500 points in a bull-case scenario and as low as 6,500 in a bear-case scenario.
Morgan Stanley said 12-month forward valuations for the KOSPI and semiconductor stocks have approached historical lows, but it added that volatility could persist amid uncertainties around artificial intelligence (AI) investment, hyperscaler capital expenditures (CAPEX), and semiconductor supply conditions.
It also maintained its recommendation for a "barbell" strategy that holds both leading tech names and defensive stocks. By sector, it upgraded telecom services to overweight and picked banks as its most preferred sector.
It classified IT, industrials, and healthcare as next preferred. Within industrials, it put defense at the top priority, followed by shipbuilding, power generation (including nuclear), and overseas construction.