"KOSPI to Reach 10,000 This Year"…9 Out of 11 Securities Research Heads Are Optimistic [KOSPI 10,000 Era]③

Survey of Research Heads at Major Korean Securities Firms

Majority Forecast "KOSPI to Surpass 10,000 This Year"

Key Factors: Semiconductor Earnings Improvement, Expanded Shareholder Returns

"KOSDAQ Needs Strong Institutional Reform"

Editor's NoteJust a year ago, the KOSPI 5000 seemed like a distant dream for the Korean stock market, but now the era of 'KOSPI 10,000' is within reach. This is the result of a combination of the semiconductor supercycle, a global Artificial Intelligence (AI) investment boom, and government-led efforts to reform the capital market structure. Amid growing concerns over a global adjustment in semiconductor stocks, The Asia Business Daily is publishing a five-part series examining the challenges of the 'KOSPI 10,000 era' from the perspectives of both foreign investors and domestic experts. The series will analyze the current state of the Korean stock market as seen by overseas investors, forecasts from domestic securities firms, and the remaining challenges to determine whether Korea’s stock market can shed the 'Korea discount' label and achieve structural re-rating.

① [Interview] "Among global AI-related stocks, Samsung Electronics and SK hynix are the cheapest"
② [Interview] "The key to the 10,000-point KOSPI era is improving ROE"
③ "KOSPI 10,000 possible this year"—Perspectives from Heads of Domestic Securities Research Centers
④ "To encourage long-term investment, tax reform is essential... Capital gains tax needs further discussion"
⑤ Will the KOSPI be included in the MSCI Developed Markets Index? Remaining upgrade tasks for the Korean market

Out of 11 heads of research centers at major domestic securities firms, 9 forecast that the KOSPI will reach 10,000 this year, driven by explosive earnings growth in the semiconductor sector. However, they noted that risk factors such as U.S. monetary policy volatility remain, emphasizing that continued strong performance by semiconductor companies and ongoing government-led structural reforms are necessary for the rally to be sustained.

Semiconductor-Led Earnings Rally: 9 out of 11 Forecast 'KOSPI 10,000'

According to a survey and interviews conducted by The Asia Business Daily on June 16 with 11 heads of research centers at Korean securities firms, 9 respondents said they believe the KOSPI could surpass 10,000 within the year. Six firms—including Korea Investment & Securities, KB Securities, and Hana Securities—have already raised their KOSPI targets (including upper bands) to above 10,000. Others, such as Hyundai Motor Securities, also see a breakthrough as possible under a bullish scenario. The remaining 2 center heads either responded that surpassing 10,000 within the year would be difficult or refrained from making a forecast.

The 9 who believe a breakthrough is possible cited the following drivers for the KOSPI's rise: 'a semiconductor-led earnings rally' (9), 'expectations for government-led market reforms' (3), and 'earnings expectations for non-semiconductor sectors' (1).

All the center heads especially expressed optimism about the sustainability of earnings for semiconductor companies. Yoo Jongwoo, Head of Research at Korea Investment & Securities, said, "Based on the improvement in earnings at semiconductor companies, breaking through KOSPI 10,000 is achievable. Both Samsung Electronics and SK hynix are continuing their upward trend in operating profits." Noh Geunchang, Head of Research at Hyundai Motor Securities, also commented, "Earnings growth centered on semiconductors is driving a fundamentally strong market. As we move into the second half of the year, long-term agreements (LTAs) and other factors could further strengthen confidence in the future earnings sustainability of the semiconductor industry."

Expectations for government policies such as amendments to the Commercial Act were also cited as factors lifting the index. Kim Dongwon, Head of Research at KB Securities, said, "Expectations that enhanced shareholder returns will ease the 'Korea discount' (the undervaluation of the Korean stock market) will also serve as a momentum for further gains. If the semiconductor-led improvement in earnings and the expansion of shareholder returns among large caps lead to a revaluation, the KOSPI will surpass 10,000." Lee Jonghyeong, Head of Research at Kiwoom Securities, forecast, "If amendments to the Commercial Act lead to more visible shareholder return policies and the introduction of separate taxation for dividend income incentivizes long-term investment in high-dividend stocks, this too will be a driver for KOSPI's rise."

There was also an opinion (1 respondent) that, coupled with earnings expectations for non-semiconductor sectors, the KOSPI could surpass 10,000. Along with improved earnings in the semiconductor sector, the performance growth in industries forming a virtuous cycle with semiconductors—such as AI and robotics—could have a ripple effect. Yang Jihwan, Head of Research at Daishin Securities, said, "While it is difficult for any sector to overtake or rival semiconductors as a leading industry, there are certainly industries that can form a virtuous cycle with semiconductors and rise to prominence. This year, non-semiconductor operating profit is expected to increase by more than 45% year-on-year based on consensus, so a virtuous cycle between semiconductor and non-semiconductor sectors grounded in earnings could open the era of KOSPI 10,000."

On the other hand, Park Younghoon, Head of Research at Hanwha Investment & Securities, pointed out, "The concentration in semiconductors is becoming more pronounced, but foreign investors are engaging in sustained net selling. Volatility in semiconductor investment sentiment, as well as macroeconomic variables such as interest rates and exchange rates, mean it will take more time to achieve KOSPI 10,000."

For a Sustained Rally, Semiconductor Earnings and Policy Consistency Are Key

The center heads cited the sustainability of semiconductor company earnings (5), consistency of government policy (4), and resolving the issue of dual listings (1) as the core elements for a continued rally in the era of KOSPI 10,000.

Yang Jihwan said, "For a revaluation, it is important that semiconductor companies driving the KOSPI's rise switch from existing quarterly contracts to long-term agreements of three to five years, thereby securing revenue stability. In addition, shareholder-friendly policies such as expanded dividends should continue to be implemented."

Lee Jinwoo commented, "One reason the domestic market has persistently traded at a discount is the issue of dual listings. Our estimate is that the scale of dual listings accounts for about 11% of this year’s and next year’s earnings consensus. Addressing these structural issues is necessary to eliminate the Korea discount."

The fact that the center heads are unanimously calling for stronger internal fundamentals and structural reforms reflects the persistent external instability threatening the market. They emphasize that urgent structural strengthening is needed so the market can withstand external shocks. The center heads identified 'interest rate volatility' (8), 'the possibility of stock price declines due to the semiconductor peak-out debate' (2), and 'high exchange rates' (2) as the greatest risks to the market going forward, particularly in view of U.S. Federal Reserve monetary policy direction.

Kim Dongwon said, "Rising U.S. interest rates, exchange rate volatility, and talk of a memory semiconductor peak are all risk factors. In particular, if the yield on the U.S. 10-year Treasury surpasses 5% and the year-over-year growth rate of the sticky core Consumer Price Index (CPI) excluding housing costs rises to the mid-3% range, that combination would be a warning sign."

KOSDAQ Still Lagging Behind KOSPI—What’s the Solution?

Although many in the securities industry forecast that the KOSPI will reach 10,000 within the year, the KOSDAQ still remains in relative stagnation. As of the previous day’s close, the KOSPI stood at 8,545.98, up 190.0% from a year ago, while the KOSDAQ was at 1,034.03, up only 33.0% in the same period.

Ten out of the eleven center heads agreed that bold regulatory reforms are needed to revitalize the KOSDAQ. Noh Geunchang commented, "The weakness in the KOSDAQ stems from poor fundamentals. Given the lack of investable companies, it is also necessary for new innovative firms to be listed on the KOSDAQ."

In this survey, the center heads identified the expulsion of insolvent companies (4) and expanded investment support (4) as the top priorities for revitalizing the KOSDAQ. Other opinions included expanding institutional and pension fund demand (3) and restoring trust in IPO pricing (1).

Cho Suhong, Head of Research at NH Investment & Securities, said, "Momentum from government policies—such as tightening delisting requirements to expel insolvent companies—will be a key catalyst for market gains. The push for the National Growth Fund is also expected to facilitate the inflow of capital into the KOSDAQ." Lee Jinwoo, Head of Research at Meritz Securities, stressed, "It is necessary to expand demand from institutions and pension funds and to restore trust in IPO pricing." Financial authorities are also accelerating structural reforms in the KOSDAQ, such as raising the market capitalization threshold for delisting and introducing requirements to eliminate penny stocks.

Will the Promotion-Relegation System Boost KOSDAQ?

In particular, the center heads are paying attention to the KOSDAQ promotion-relegation system set to be introduced in October. This system divides the KOSDAQ market into premium, standard, and under-review tiers based on market capitalization and performance, aiming to enhance competitiveness within the market. Shin Jungho, Head of Research at LS Securities, said, "Changes such as the government's introduction of the KOSDAQ promotion-relegation system are positive, and it will be important to monitor the detailed policies as they are rolled out."

Yang Jihwan added, "As qualitative requirements such as performance and corporate governance become more important, market interest will rise again once the promotion-relegation guidelines are released. During the process of launching the premium index and related ETFs in October, there is a possibility that the KOSDAQ market will be revalued."

This content was produced with the assistance of AI translation services.