South Korean brokerages are increasingly forecasting that the domestic stock market will sustain its rally in the second half of this year, driven by artificial intelligence (AI) and semiconductors. Analysts say expanding AI investment by U.S. Big Tech is boosting memory chip demand, providing fresh upside momentum for the local market. Some brokerages have set their KOSPI ceiling as high as 9,000 to 9,900.
According to the financial investment industry on Wednesday, Shinhan Securities projected a second-half KOSPI trading band of 7,000 to 9,300, while leaving open the possibility of 9,900 in an optimistic scenario. Hanwha Investment & Securities forecast a range of 6,600 to 9,100, and iM Securities projected 7,300 to 9,500.
The brokerages commonly cited the AI investment cycle and improving memory chip conditions as the key variables for the domestic market. As global Big Tech firms compete to expand data center investments and AI infrastructure, earnings improvements at Korean semiconductor companies are emerging more strongly than expected, they said.
"This Time It's Not a Supply Shortage"…AI-Driven Chip 'Long Cycle'
Brokerages view the current semiconductor boom as different in nature from past cycles. Rather than a simple supply shortage, structural demand growth tied to the expansion of the AI industry is leading the market, they argue.
Shinhan Securities said in a report Wednesday, "The second-half stock market will focus on the physical infrastructure benefits created by AI capital expenditure (Capex) rather than expectations for an economic recovery." The brokerage added, "If the United States is the center of AI demand and capital markets, then Korea is the market where memory and AI infrastructure benefits are most directly reflected."
Heungkuk Securities also noted the possibility that expanding global AI investment could translate into higher Korean exports. The brokerage explained that a semiconductor-led export recovery could stimulate corporate earnings improvement and even a domestic consumption rebound.
Hanwha Investment & Securities, in particular, raised the possibility that the current memory chip cycle could prove prolonged. Unlike the 2017-2018 surge caused by a temporary supply shortage, the current upswing is grounded in expanding AI demand, suggesting it could play out over a longer horizon than previous cycles, the brokerage said.
Oil Prices and Rates Remain Variables…"Sector Rotation Possible in H2"
Even amid the optimism, risk factors are not small. The biggest variables cited are Middle East tensions and international oil prices. If crude oil prices remain above $100 per barrel for an extended period, global inflationary pressures could mount again, analysts warn.
Interest rates were also flagged as a key variable. iM Securities said volatility in the stock market could widen if the U.S. 10-year Treasury yield exceeds 4.5 percent. The U.S. Federal Reserve's monetary policy direction was also mentioned as a factor that will shape market flows in the second half.
By sector, analysts also raised the possibility of a rotation following the semiconductor-concentrated rally. "Opportunities in the second half could emerge in non-semiconductor and non-IT sectors," said Ahn Hyun-kook, an analyst at Hanwha Investment & Securities. "For semiconductors to continue rising, a relative valuation recovery in non-semiconductor sectors needs to accompany it."
He added that shipbuilding and defense sectors are likely to maintain structural growth trends, while bank stocks could see their fundamental strengths come into focus. Robotics, biotech, secondary battery, and China consumption-related stocks were also cited as sectors with rotation potential depending on supply-and-demand changes.
