Cracks are appearing in the "upgrade parade" of target prices that has continued at Korean brokerages this year. At the start of the year, the number of upgrade reports outpaced downgrade reports by nearly 10 times, but the gap has narrowed to a comparable level this month. As optimism gradually loses steam among the semiconductor "duo" that has led the market rally—with not only target-price downgrades but even target prices falling short of recent share-price highs emerging—the KOSPI has also repeatedly surrendered its intraday surges.
According to financial data provider FnGuide on the 10th, upgrade reports issued by Korean brokerages this month totaled 167, just 10 more than downgrade reports (157). In January, upgrade reports were 4.1 times downgrade reports, and in February, when expectations for a KOSPI rise ran high, the gap widened to 9.7 times. The upgrade advantage then continued at 5.9 times in March, 3.9 times in April and 4.0 times in May, but narrowed to 2.2 times in June and to 1.1 times this month.
This is largely due to a slowdown in target-price upgrade momentum for the semiconductor duo. Target-price upgrade reports for SK hynix (000660) fell from 34 in April to 22 in May and 18 in June, and this month reached only six through the 10th. Samsung Electronics (005930) likewise decreased from 26 in April and 31 in May to 19 in June, and stands at six so far this month. As a result, target-price upgrades for related materials, parts and equipment stocks are also analyzed to have slowed alongside.
Brokerages' views on whether the semiconductor cycle has peaked are gradually diverging. DB Financial Investment on the 8th maintained Samsung Electronics' target price at 360,000 won, lower than its peak of 374,500 won, while KB Securities on the same day presented 600,000 won. A bullish view that further gains are possible on the back of artificial intelligence (AI) demand is pitted against a cautious view that the semiconductor industry is nearing a peak.
For SK hynix, BNK Investment & Securities on the 8th presented a target price of 1.85 million won along with a "HOLD" investment opinion. This is below the 2.076 million won share price used as the basis for the report. In contrast, most brokerages are maintaining target prices in the 3.8 million to 4.3 million won range, with KB Securities presenting 4.2 million won.
As target-price downgrades and forecasts below current share prices emerge even among the large-cap semiconductor stocks that have led the market's rise and the target-price upgrades, the one-sided optimism seen at the start of the year is analyzed to be weakening. The KOSPI has also shown extreme volatility recently. After rising to as high as 9,385.59 intraday on the 19th of last month, it repeatedly surged and plunged, and this month it has notably closed well off its intraday highs. Except for the 3rd, this month's trading-day closes have formed at levels more than 3% below their intraday highs.
In particular, over the past two days the index failed to hold its intraday surges to the end. On the 9th, the KOSPI soared as much as 4.1% intraday from the previous session's close but gave back most of the gains, ending up just 0.62%. On this day too, it climbed to as high as 7,704.93 intraday, up 5.7% from the previous session, and a buy sidecar was even triggered around 12:54 p.m. But as it pared its gains again, it closed at 7,475.94, up 184.03 points (2.52%) from the previous session.
The share-price trajectories of the semiconductor duo also diverged. Samsung Electronics closed at 285,000 won, up 2.52% from the previous session, while SK hynix swung between gains and losses before turning weak in the final stretch, closing down 0.27% at 2.18 million won. "Brokerages tend to raise target prices together when the market rises, but when the uptrend stalls, upward revisions also decline," the head of one asset management firm said. "A decline in upgrade reports and an increase in downgrade reports is a signal that the market's expectations are changing."
