"Samjeonnix Semiconductor Rally to Continue": Research Heads Share Outlook for Second-Half Stock Market

10 Research Heads: “Earnings Improvement Centered on Semiconductors Will Drive Gains in the Second Half”

Potential Beneficiary Sectors Expand to AI Infrastructure, Energy, Construction, Finance

Biggest Risk Is U.S. Interest Rates... “Jackson Hole and September FOMC in Focus”

The main driver behind the KOSPI’s rise in the first half of this year was undoubtedly semiconductors, led by the so-called “Samjeonnix” — Samsung Electronics and SK hynix. As the rally centered on these two companies continued, the KOSPI set new record highs. The key questions now are whether the semiconductor rally will continue into the second half, which other sectors are worth paying attention to, and what variables could shake up the market in the latter half of the year.

On June 19, The Asia Business Daily conducted a survey of research center heads from major domestic securities firms regarding their outlook for the stock market in the second half of the year. Among the 11 respondents, 9 said there is a possibility that the KOSPI could break through the 10,000 mark in the second half. Lee Jonghyung, Head of Research at Kiwoom Securities, stated, “We expect an earnings-driven market, where profit momentum outpaces share price momentum, to continue in the second half.” He suggested a top-end KOSPI band of 10,000, applying a forward PER of 10 times. Park Yeonju, Head of Research at Mirae Asset Securities, did not provide an official index forecast but predicted, “A positive trend will continue, centered on the semiconductor sector.”

In the Second Half, ‘Earnings’ Led by Semiconductors Will Continue to Drive the Market

For the second half, the research center heads overwhelmingly cited earnings as the biggest driver of further gains. Out of 11 respondents, 10 pointed to earnings improvement centered on semiconductors. This was followed by investment momentum in artificial intelligence (AI) (4 respondents), stronger shareholder returns (4), and structural reforms in the stock market (3). Notably, many analysts pointed out that AI investment ultimately translates into semiconductor earnings, given the structure where increased investment in AI servers and data centers leads to improved performance for memory chipmakers such as Samsung Electronics and SK hynix.

No Geunchang, Head of Research at Hyundai Motor Securities, commented, “Earnings growth centered on semiconductors will trigger a fundamentally strong bull market. As we move into the second half, growing confidence in the sustainability of future earnings for the semiconductor industry—bolstered by long-term agreements (LTAs)—will be a key driver of the market.” Kim Dongwon, Head of Research at KB Securities, said, “The main drivers of gains in the second half will be AI and semiconductor earnings momentum, improvements in the memory market such as HBM, robust exports, expanded shareholder returns, and expectations that the Korea discount will diminish. The fact that AI demand supports IT and power-related industries is also positive.”

Among investors, some concerns have emerged that share prices may have already risen too much. The KOSPI, which was below 3,000 just a year ago, is now hovering around the 9,000 mark. However, the research heads highlighted that the pace of earnings improvement is outstripping share price gains. Yang Jihwan, Head of Research at Daishin Securities, said, “Since we are currently in an earnings-driven market, the key variable for sustaining the upward trend is earnings performance,” predicting, “The KOSPI is expected to continue its record-breaking run in line with the upward trend in leading earnings per share (EPS).”

Most center heads also had a positive outlook on the sustainability of the semiconductor rally. While the overall forward price-to-earnings ratio (PER) of the Korean stock market is around 7 times, Samjeonnix trades at close to 6 times. This suggests that the market is not giving a sufficient premium relative to earnings growth. However, No cited as a risk factor the “possibility that U.S. hyperscalers and AI companies could be eliminated due to excessive investment and therefore reduce their investments.” Shin Jungho, Head of Research at LS Securities, also mentioned funding challenges at hyperscalers as one of the risks. Ultimately, whether global big tech companies such as Microsoft, Amazon, Google, and Meta maintain their AI investment stance will be the key variable for the semiconductor market.

Which Sectors Beyond Semiconductors to Watch... Unanimous Consensus on Interest Rates as the Biggest Risk

The heads of research centers advised that investors should also pay attention to sectors beyond semiconductors in the second half. While semiconductor earnings are driving the market, improvements in earnings in other sectors are also being observed. Earnings forecasts for KOSPI200 companies after the end of 2025 have been significantly revised upward. Although most of the increase is attributable to Samjeonnix, earnings forecasts for companies excluding semiconductors have also risen by 37% over the same period. In particular, earnings outlooks have been raised for sectors such as energy and chemicals, construction, heavy industry, steel and materials, finance, healthcare, and industrials.

Yang noted, “It will be difficult for any industry to surpass or match semiconductors as the leading sector, but there is ample potential for industries that can form a virtuous cycle with semiconductors to emerge.” He added, “This year, earnings improvement is also expected for sectors excluding semiconductors, and operating profit for non-semiconductor industries is forecast to improve by more than 45% year-on-year based on consensus.” In addition, with expanded shareholder returns and the introduction of separate taxation on dividend income cited as drivers for the market in the second half, financial stocks and high-dividend stocks are being mentioned as beneficiary sectors.

There was virtually no disagreement among the heads of research centers on the main risks facing the market in the second half. All 11 respondents identified U.S. monetary policy and interest rates as the most important variables. This was followed by exchange rate volatility (4 respondents), the possibility of regulatory pledges ahead of the U.S. midterm elections (3), and inflation concerns (3). In particular, regarding U.S. monetary policy, the Jackson Hole meeting in August and the Federal Open Market Committee (FOMC) in September are seen as key inflection points. It was suggested that depending on the signals given by the Federal Reserve, investment strategies may need to be restructured. In addition, changes in earnings forecasts for major companies for 2027 were also cited as points for the market to watch.

Lee Jinwoo, Head of Research at Meritz Securities, advised, “Even if the Korean market faces a phase of rising interest rates in the second half, the stock price trend is expected to be maintained. However, depending on interest rate levels, it may be necessary to restructure portfolios to focus on blue-chip stocks.” Park Younghoon, Head of Research at Hanwha Investment & Securities, commented, “Both the drivers of gains and risks stem from semiconductor investment sentiment and macro variables (interest rates, exchange rates).”

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