South Korea’s stock market has remained relatively resilient despite the Bank of Korea’s consecutive benchmark rate hikes, and Daishin Securities has now set a year-end KOSPI target of 9,300. The firm projects the index, currently hovering in the 6,000–6,500 range, will break through the 9,000 level during the fourth quarter.
Daishin Securities analyst Moon Nam-joong on the 8th presented a second-half KOSPI band with a floor of 6,000 and a ceiling of 9,300, explaining that “the KOSPI’s 12-month forward price-to-earnings ratio (PER) currently stands at 5.63x, a historic low,” and that “based on past experience, stock prices have consistently risen from this zone.”
He cited positive developments from the U.S. and growth expectations as the basis for the index’s upside. Nvidia’s strong earnings have quelled concerns about excessive AI investment and offset the shock of rate hikes, he noted. The Bank of Korea’s upward revision of this year’s economic growth forecast from 2.6% to 3.3% was also assessed as creating a favorable environment for equities.
“Because the KOSPI’s market capitalization has grown, the return needed to break through 9,000 is only around 11%, and the time required to cross round-number thresholds has become much shorter than in the past,” Moon said, urging investors to approach the market with patience rather than impatience.
Semiconductors as the Core Pillar of Index Defense
Semiconductor bellwethers have been identified as the primary force defending current market supply and demand. Moon pointed out that “the reason the KOSPI has not collapsed even amid selling by retail investors, foreigners, and institutions alike is thanks to the large-scale buybacks by Samsung Electronics (005930.KS) and SK Hynix (000660.KS).”
Approximately 10 trillion won (approximately $7.4 billion) in buybacks were already executed between August 21 and 28, with remaining purchasing capacity of roughly 40 trillion won (approximately $29.7 billion) available before November 21, which is expected to serve as a support pillar preventing a second-half index decline.
The analysis also suggests that the benefits of the AI revolution driving global equities will flow through to the South Korean market. The logic is that when U.S. hyperscaler companies increase capital expenditure, the biggest beneficiaries are ultimately semiconductors at the core of the value chain, and the earnings of Samsung Electronics and SK Hynix, which produce these chips, will lift the KOSPI’s level. South Korea’s semiconductor export growth rate has now increased for 18 consecutive months as of August, cited as a coincident indicator supporting the bullish outlook.
Moon drew a line on the possibility of a leadership rotation that has drawn market attention. He noted that stocks purchased by foreign investors when Middle East geopolitical risks, including the Iran conflict, eased were concentrated in five sectors—semiconductors, nuclear power, power equipment, secondary batteries, and defense—and that this trend is expected to persist.
“Some point out that South Korean semiconductor companies’ shareholder returns are weaker than their U.S. counterparts, but this is a misunderstanding arising from differences in the calculation baselines of free cash flow (FCF) and excess cash,” Moon added. “Samsung Electronics and SK Hynix are actually supporting their stock prices quite aggressively relative to the cash they are currently generating.”
‘Mr. Semiconductor’ Noh Geun-chang Returns with Independent Research
Meanwhile, Noh Geun-chang, the former head of Hyundai Motor Securities’ research center who earned the nickname “Mr. Semiconductor” over 31 years as a semiconductor analyst, declared his retirement at the end of last month and is launching an independent research venture. He plans to open Semicon Research Lab near Seolleung Station in Seoul in September and regularly publish reports covering major trends in the semiconductor and IT/telecom equipment industries, as well as companies’ intrinsic value and earnings estimates.
On the recent underperformance of Samsung Electronics and SK Hynix, Noh said: “Nvidia and big tech earnings were beyond reproach, but as the free cash flow of hyperscalers—the entities driving AI investment, such as Amazon—turned negative, doubts emerged about whether the current scale of investment is sustainable.” He added that “the recent rate hike concerns compounded this, forming the backdrop for the semiconductor stock correction.”
He cited a price-to-book ratio (PBR) of 1x as the benchmark for judging Samsung Electronics’ floor, stating: “Samsung Electronics has always formed a bottom at or below 1x PBR, and this benchmark is highly likely to remain valid going forward.”
Noh, who accurately called Samsung Electronics’ bottom at 51,000 won (approximately $38) in 2023, acknowledged that his 2021 forecast of the stock reaching 100,000 won had missed the mark. “At the time, I expected that COVID-19-driven demand for contactless services, remote work, and remote business would persist for a considerable period, but normalization came faster than expected, and the downcycle also arrived earlier than anticipated,” he admitted.
He reported that investor interest in South Korea’s semiconductor industry has risen significantly in China recently, with companies like ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC) drawing attention. Noh said he traveled to China on business through his final weekend, and that local investors showed particular interest in how long the upcycle in South Korean memory semiconductors would last.
The two experts’ views on the semiconductor sector’s direction are broadly aligned. While Moon identified semiconductors as the core driver of KOSPI upside, Noh likewise plans to focus on major semiconductor industry trends and maintain communication with the market through his independent research. However, Noh flagged hyperscalers’ deteriorating free cash flow as a short-term risk factor, suggesting that the timing of the semiconductor stock rebound will hinge on when market doubts about the sustainability of AI investment are resolved.