Global investment bank (IB) Morgan Stanley raised its investment view on Korean stocks to "overweight" from "equalweight."

A closing price is displayed on the electronic board in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul, on the 3rd. The KOSPI closes at 6,257.45, down 338.00 points (5.12%) from the previous trading day, while the KOSDAQ finishes at 737.35, up 17.59 points (2.44%). /Courtesy of News1

On the 3rd, according to Bloomberg News and other foreign media, Morgan Stanley said in a report that it lifted its investment view on Korean stocks to "overweight." Previously, Morgan Stanley had maintained an "equalweight" view on Korean stocks.

Morgan Stanley said that after the recent unwinding of concentration and leverage in the Korean market, the KOSPI index has 36% upside potential to reach its in-house target of 9,000 points.

In particular, it assessed that as the Korean stock market fell and leverage was cleared, lower price pressure provides investors with an optimal opportunity to enter artificial intelligence (AI) trading and semiconductor supercycle theme stocks.

Regarding the recent selling in the Korean stock market, it noted that it stems from technical factors on the supply-demand side rather than damage to fundamentals. The KOSPI index surged 18% on the 31st of last month and then closed down 5.12% on the day.

It added that more than half of the unwinding has been completed for single-stock leveraged exchange-traded funds (ETFs), hedge fund leveraged positions, and margin loan balances of individual investors.

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