After the KOSPI broke through its previous peak despite shocks from the U.S.-Iran conflict, a consensus is forming in Korea's securities industry that the index's upper ceiling could open further, driven by earnings improvements centered on the semiconductor sector and expectations of liquidity inflows. However, views diverge on the intensity of foreign investors' return and the lasting impact of high oil prices on the stock market.
In an emergency market diagnosis conducted by The Seoul Economic Daily on Monday with four experts from major securities firms, ceasefire expectations and upward revisions to semiconductor-led earnings forecasts were cited as the key drivers of the KOSPI's rise. Even as share prices were pushed down during the war, 12-month forward earnings per share (EPS) was instead revised upward, highlighting valuation appeal and pushing the index ceiling higher.
Experts largely viewed the current rally not as a simple rebound but as an extension of an "earnings-driven market." Hwang Seung-taek, head of the research center at Hana Securities, said, "We see corporate earnings growth in the domestic market exceeding earlier expectations. We need to take an approach that leaves room above the aggressive index ceiling of 7,900 points presented at the start of the year." The interpretation is that investor sentiment, which had been suppressed during the war, has recovered along with ceasefire expectations, and recent corporate earnings are showing stronger-than-expected momentum, requiring a re-evaluation of the index level itself. Global investment banks (IBs) including Goldman Sachs (8,000) and JPMorgan (8,500) have recently raised their KOSPI ceilings.
Alongside these upward earnings revisions, some analysts describe the market as one where undervaluation appeal is being reflected simultaneously. Yoon Chang-yong, head of the research center at Shinhan Securities, said, "Samsung Electronics' preliminary earnings, as the top market-cap stock in Korea, confirmed that semiconductor fundamentals remain solid, and valuation appeal grew further while share prices were suppressed. Assuming the Middle East situation does not worsen again, the additional upward trend could continue as the market digests the earnings season."
Baek Young-chan, head of the research center at Sangsangin Securities, also assessed that the KOSPI has sufficient room to continue its rally. "If a ceasefire is reached in the first half and additional inflation concerns are alleviated, there is a short-term possibility of 'overshooting,'" Baek said. "Our official forecast is at the 7,500 level, but considering market sentiment and earnings flow, the 8,000 line can also be left open." However, he also raised the possibility that upward momentum could slow if rising oil prices are gradually reflected in corporate earnings in the second half, judging that even if the business environment holds up, pressure on profit margins could increase.
While experts agree that semiconductors remain the market's central axis, momentum is also spreading to peripheral promising sectors. With increased infrastructure demand from expanded artificial intelligence (AI) investment, related sectors such as power equipment and nuclear power have come into focus, and investor sentiment is also gathering in construction and machinery sectors as post-war reconstruction demand expectations are reflected.
Views on foreign investor flows diverged. Foreign investors recorded a record net selling of nearly 36 trillion won on the KOSPI last month, and the foreign ownership ratio of Samsung Electronics recently hit its lowest level since the financial crisis, raising expectations of a "reversal." On the other hand, cautious views have also emerged that it is difficult to conclude a trend shift to "buying" from a portfolio rebalancing perspective, given that the index has already risen significantly. In particular, the fact that the high oil price and high exchange rate environment has not been completely resolved was cited as a burden.
Park Hee-chan, head of the investment strategy division at Mirae Asset Securities, said, "It is difficult to see this as a phase where foreign investors are returning in earnest, and a gradual adjustment of weightings relative to existing positions could continue. Expectations for the semiconductor business remain, but given the significant rise in share prices, profit-taking responses could also accompany this." This is interpreted to mean that while domestic flows support the index, foreign investors may place more weight on position management than on aggressive re-entry.
Analysts say the turning point for future market flows depends on the earnings and guidance of major semiconductor firms and U.S. Big Tech. In particular, starting with SK hynix's (000660.KS) earnings announcement scheduled for this week, the continuation of the current upward trend will be gauged as investment plans and demand outlooks from global AI companies are confirmed. Amid advice that an approach centered on leading sectors remains valid for investment strategy in the near term, opinions were also raised that after a short-term surge, selective responses are needed by checking share price levels against the pace of earnings improvement.
