KOSPI Target Raised Above 10,000 to 11,500 Level: "Semiconductor Supercycle"

Normalization of KOSPI Valuation
Commercial Act Revision, Oil Price and Interest Rate Stability
Inflection Point Expected in Late August to Early September

As the KOSPI continues its strong upward trend, Daishin Securities has raised its target for the KOSPI index this year to the 11,500 level. The analysis suggests that improved earnings from the semiconductor super cycle and long-term contracts with big tech companies will drive the normalization of stock market valuations and usher in the era of "KOSPI 10,000."

On the 17th, the KOSPI index opened at 8,622.13, down 104.47 points from the previous trading day. The current status of the domestic stock market is displayed on the electronic board in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. Photo by Kang Jinhyung

On June 17, Lee Kyungmin, a researcher at Daishin Securities, announced, "We are raising our KOSPI target index to the 11,500 level, reflecting a price-to-earnings ratio (PER) of 10 times the 12-month forward earnings per share (EPS)." Specifically, this figure is calculated by applying a PER of 8.8 times to the semiconductor sector's net profit of 605 trillion won and a PER of 15 times to the non-semiconductor sector's net profit of 227 trillion won, arriving at a total of 11,499 points.

Daishin Securities particularly assessed that the semiconductor sector is leading the market rally. Since the beginning of last month, the earnings outlook for the semiconductor sector has been revised upward by 13.23% in just one month. Global market research firm TrendForce forecasts that the change in semiconductor prices in the second quarter will increase by as much as 58–75% compared to the previous quarter.

The rationale for applying a PER as high as 8.8 times to the semiconductor sector is the expansion of long-term contracts. Lee noted, "Currently, nearly 70% of all DRAM transactions for artificial intelligence (AI) servers are being carried out under long-term contracts." He added, "The global big tech alliance, including Nvidia, Microsoft, and Google, is signing five-year long-term contracts with conditions such as a floor price and advance payments of 10–30%. This has greatly enhanced earnings stability."

The non-semiconductor sector is also expected to see valuation expansion, supported by the enforcement of amendments to the Commercial Act and large-scale share buybacks, as part of strengthened shareholder-friendly policies. The current trend of earnings upgrades is broadening beyond semiconductors to include 17–19 sectors, such as energy, securities, shipbuilding, insurance, and machinery.

The macroeconomic environment is also positive for the stock market. Following the peace agreement between the United States and Iran, the full reopening of the Strait of Hormuz is supporting West Texas Intermediate (WTI) crude oil prices in the high $70s. The yield on the 10-year U.S. Treasury note is expected to stabilize to the low 4% range.

Lee explained, "The 12-month forward EPS surged from 666.6 at the end of March to 1,056.4 as of June 15." He added, "Although the KOSPI is attempting to break above the 8,500 level, the forward PER remains around 8 times. Even a return to historical average valuations would be sufficient to lift the index to a higher level."

However, the period from late August to early September was identified as a potential inflection point following the relentless rally. There is analysis that, from the mid-to-late third quarter of 2026, the burden of last year's strong earnings base could affect growth. In particular, the hawkish (favoring monetary tightening) stance of newly appointed U.S. Federal Reserve (Fed) Chair Kevin Warsh was cited as a key variable. Lee cautioned, "As a critic of quantitative easing and an inflation fighter, Chair Warsh may announce a plan to reduce the Fed's balance sheet at the Jackson Hole meeting in late August or formalize a rate hike for 2027 at the September Federal Open Market Committee (FOMC) meeting. We must be alert to these possibilities."

Lee added, "Above the 11,000 level for the KOSPI, it is advisable to gradually reduce portfolio beta and secure stability by increasing allocations to defensive and dividend stocks."

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