The KOSPI, which plunged amid shocks from the Middle East conflict, has staged the fastest rebound among major global stock markets this month. As chip-driven earnings expectations and undervaluation appeal come into focus, optimism is spreading in the securities industry, with some projecting the index's upper range above 7,000.
"Stronger After the Plunge"… KOSPI Ranks No. 1 in Global Rebound
According to the Korea Exchange, as of 9:57 a.m. on Thursday, the KOSPI was trading around 6,230, up 38.56 points (0.62%) from the previous session. The KOSDAQ also rose 9.81 points (0.84%) to 1,179.85.
According to Koscom Check on Wednesday, the KOSPI climbed 22.55% through the 17th this month, becoming the only major market to post a gain in the 20% range. It outpaced Taiwan's TAIEX (16.02%), Japan's Nikkei (14%) and the U.S. Nasdaq Composite (13.33%).
The KOSPI had previously plunged more than 19% last month amid fallout from the Middle East conflict, recording the largest drop among major markets. However, bargain-hunting flowed in following the steep decline, driving a swift rebound.
The market views this as a typical valuation recovery phase, in which "the bounce was as strong as the drop was excessive."
"PER Below 8"… Undervaluation Meets Earnings Explosion
The core backdrop of the KOSPI's rebound is its undervaluation relative to earnings.
Operating profit of KOSPI-listed companies this year is expected to reach 700 trillion to 800 trillion won, a surge of 160% to 180% from the previous year. Meanwhile, the forward price-to-earnings ratio (PER) remains below 8, which the securities industry assesses as an "extreme undervaluation zone."
Foreign investor flows are also turning positive. Kim Dong-won, head of KB Securities' research division, said, "Foreign capital that had exited due to geopolitical risks will return with a focus on earnings," adding, "Interest in the KOSPI is likely to expand again."
Accordingly, the securities industry is presenting the KOSPI's upper range above 7,000. KB Securities and JPMorgan forecast 7,500, Hana Securities 7,900, and Nomura up to 8,000.
"It Comes Down to Chips"… Samsung, SK hynix Drive the Rally
At the heart of this KOSPI rebound are semiconductors.
On Thursday, Meritz Securities raised its target price for SK hynix (000660.KS) to 1.7 million won from 1.45 million won. First-quarter operating profit is projected at 37.5 trillion won, up 95% from the previous quarter, marking an all-time high.
Kim Sun-woo, analyst at Meritz Securities, said, "Amid deepening memory supply shortages, quarterly results will continue to be revised upward," adding, "There is a high possibility of setting record-high earnings throughout the year."
The memory industry is assessed to have entered a historic boom phase. Kim Dong-won, analyst at KB Securities, explained, "Memory inventories at Samsung Electronics and SK hynix are currently at one to two weeks, a historic low," adding, "AI data center demand is absorbing 60% to 70% of total memory shipments, driving price increases."
As AI server shipment growth significantly outpaces overall server market growth, memory prices and earnings are structurally trending upward, according to the analysis.
Accordingly, target price upgrades for Samsung Electronics (005930.KS) are following suit. Mirae Asset Securities and Hana Securities set their targets at 300,000 won, Daol Investment & Securities at 350,000 won, and KB Securities at 360,000 won.
