Daishin Securities has raised its KOSPI target by more than 30%, from 8,800 points to 11,500 points. The brokerage cited the rapid rise in corporate earnings forecasts, led by semiconductors, along with a growing possibility of valuation normalization, the level of share prices relative to earnings. However, it warned that a market inflection point could emerge around the Jackson Hole meeting in late August and the September Federal Open Market Committee (FOMC) meeting.
"We are raising the KOSPI target from 8,800 points to 11,500 points," Lee Kyoung-min, an analyst at Daishin Securities, said in a report Monday. "A phase of unwinding short-term overheating and absorbing supply will be unavoidable, but as valuation normalization based on earnings improvement continues, the KOSPI's trend of setting record highs will also persist."
As the basis for the target, Lee pointed to earnings growth and valuation expansion in both semiconductor and non-semiconductor sectors. He estimated semiconductor net profit at 605 trillion won and non-semiconductor net profit at 227 trillion won.
In particular, he forecast that the price-earnings ratio (PER) of the semiconductor sector would normalize from the current 5.43 times to around 8.8 times. "About 70% of DRAM transactions for artificial intelligence (AI) servers are being conducted in the form of long-term contracts," Lee explained. "With interest rate increase concerns largely priced in, the expansion of long-term contracts could lead to the normalization of semiconductor valuations."
He also expected the non-semiconductor sector PER to improve from the current 12.71 times to 15 times. He attributed this to the implementation of the revised Commercial Act, large-scale treasury stock cancellations, and the strengthening of shareholder-friendly policies.
Earnings forecasts are also improving rapidly. The KOSPI's 12-month forward earnings per share (EPS) rose from 666.6 points at the end of March to 1,056.4 points as of June 15. "Even though the KOSPI has broken through the 8,500 level, the forward PER stands at only around 8 times," Lee said. "There is sufficient room for further gains through valuation normalization alone."
He also analyzed that oil price stability following a peace agreement between the United States and Iran is favorable for the stock market. If oil prices stabilize in the high $70s per barrel and U.S. Treasury yields and the dollar's value stabilize downward, the KOSPI's upward momentum in July and August could strengthen further, he forecast.
However, he said caution is needed from late August to early September. "The KOSPI tends to move in line with or somewhat lag forward EPS," Lee said. "From the middle to latter part of the third quarter of 2026, there is a possibility that the burden of base effects on earnings growth rates will emerge."
He warned: "We must watch whether the Federal Reserve's balance sheet reduction plan is disclosed at the Jackson Hole meeting in late August, and whether the possibility of an interest rate hike in 2027 is signaled at the September FOMC meeting. A contraction in liquidity and entry into a rate-hike cycle could become a trigger that transforms an earnings-driven market into a liquidity-tightening market."
For promising sectors in the second half, Lee selected semiconductors, secondary batteries, automobiles, shipbuilding, and power equipment. As top picks, he presented Samsung Electronics (005930.KS), LS (006260.KS), Hanwha Aerospace (012450.KS), HD Hyundai Heavy Industries (329180.KS), L&F (066970.KS), Shinsegae (004170.KS), Hyundai Motor (005380.KS), Celltrion (068270.KS), KT (030200.KS), and DB Insurance (005830.KS).
