As the KOSPI hit a record high, topping 7,500 points intraday, brokerage firms are projecting that further upside remains ample. Some analysts have even suggested the benchmark index could climb to 9,000 points within the year.
NH Investment & Securities (005940.KS) raised its 12-month forward target for the KOSPI to 9,000 points, up from its previous projection, in a report released Monday. The brokerage determined that while interest rates and risk premiums have risen in the wake of the war between the United States and Iran, the pace of increase in corporate earnings estimates is overwhelming these headwinds.
The speed of upward earnings revisions has been rapid. Compared to when NH Investment & Securities presented its previous target of 7,300, the KOSPI's earnings per share (EPS) forecast has risen by approximately 36%. Over the same period, the cost of equity (COE) climbed to 8.37% on the back of rising government bond yields and higher risk premiums, but the increase in EPS has offset this, pushing up the KOSPI's fair value, according to the report. In particular, the forecast for 2027 net profit growth has been raised from around 10% at the start of the year to approximately 24% recently. The brokerage explained that this upward trend in earnings estimates is the most important factor driving the KOSPI's rise.
The macroeconomic environment is also favorable. Despite oil prices rising due to the war, core inflation has shown a more stable trajectory than expected, supporting investor sentiment. In addition, the U.S. 30-year Treasury yield has fallen below 5%, limiting pressure on equity markets.
Positive changes are also being detected on the supply-demand front. The activation of foreign investor omnibus accounts has led to continued inflows of new overseas capital, contributing to stability in the won-dollar exchange rate. In particular, foreign capital has concentrated in top market-cap semiconductor stocks, underpinning the index's rise.
In the short term, however, volatility factors also exist. Large initial public offerings (IPOs) scheduled for the second half, including SpaceX, Anthropic, and OpenAI, as well as risks related to the private credit market, could affect supply and demand. Nevertheless, the report views these as short-term correction factors rather than forces that would reverse the trend. "There are no factors yet that would change the trend of earnings estimates," NH Investment & Securities said. "Apart from discomfort over the pace, no factors have been identified that would alter the trend."
