Report That Accurately Predicted KOSPI's 20% Plunge Now Says "Buy Now... Path to 11,450 Points Opens"

"Current KOSPI at the Bottom Range" Assessment
"Continued AI Investment Bodes Well for Semiconductors"
"Long-Term Ceiling at 11,450 Points"

On the 8th, the KOSPI and KOSDAQ indices were displayed on the status board in the dealing room of Hana Bank in Jung-gu, Seoul. On that day, the KOSPI closed at 7,246.79, down 409.52 points (5.35%) from the previous day, while the KOSDAQ index closed at 785.00, down 46.23 points (5.56%). Photo by Yonhap News Agency

Recently, with the KOSPI plunging 20% in a short period and pessimism spreading throughout the market, a securities firm report that precisely predicted the market’s peak two months ago is drawing significant attention. In particular, the analyst behind this analysis has characterized the current correction not as a structural collapse but as an "excessive, temporary adjustment," and has reiterated the long-term outlook that the KOSPI will surpass 10,000 points, further fueling market interest.

"SK hynix Surpasses Samsung Electronics in Market Cap? Bull Market Is Over"…Forecast Proved Accurate

Back on May 18, Jaeman Lee, head of global investment analysis at Hana Securities, signaled the end of the current bull market in his report titled "KOSPI, Entering the 10,000 Era." The core basis was the reversal of market capitalization between SK hynix and Samsung Electronics. He analyzed, "If SK hynix, whose net profit estimates for 2026–2027 are lower than those of Samsung Electronics, overtakes Samsung Electronics in market capitalization, it means the bull market has peaked."

This scenario played out exactly as predicted. On June 22, SK hynix surpassed Samsung Electronics in market capitalization for the first time ever, and on the same day, the KOSPI hit an all-time high of 9,114.55 points. Subsequently, the index plunged nearly 20% to 7,291.91 points as of July 9, entering a correction phase.

Image to assist in understanding the article. The Asia Business Daily DB

This is interpreted as a structural overheating signal, similar to the case in March 2000 during the "dot-com bubble," when Cisco Systems overtook Microsoft (MS) and General Electric (GE) to become the largest company by market capitalization in the S&P 500 just before the market collapsed.

"Currently at the Bottom"…Entering Technical Rebound Phase

However, in his recent report, Mr. Lee reassessed the current market as being in a bottoming phase. He diagnosed, "The KOSPI has technically reached a complete bottom."

The basis for this assessment is the historical pattern of a "maximum decline of 20%." Since 2023, the KOSPI has repeatedly rebounded after dropping about 20% from its previous peak. Applying this to the latest peak of 9,114 points, the bottom is calculated at around 7,290 points. Since the index has indeed fallen to this level, there is a high probability of a technical rebound.

Mr. Lee set a short-term rebound target at 9,240 points. This figure is derived by applying the recent average (103.3%) of the "20-day moving average divergence," which measures the gap between the stock price and its moving average. The interpretation is that the excessively widened gap caused by temporary panic is likely to normalize as prices converge with fundamentals, making this a sufficiently attainable target.

"No Problem with Fundamentals"…KOSPI Projected to Reach 11,450 Points

The more noteworthy point is the long-term outlook. Mr. Lee presented an upper bound for the KOSPI at 11,450 points. This is based on estimated net profits of KRW 946 trillion for KOSPI-listed companies in 2027 and the average price-to-earnings ratio (PER) of 9.96 times since 2010. The number is based on a quantitative analysis combining corporate earnings and valuation, emphasizing that the current decline is a "psychological overselling" phase rather than a deterioration of fundamentals.

Image to aid understanding of the article. The Asia Business Daily DB

In fact, the KOSPI's overall net profit growth rate is expected to be 235% this year and 30% next year, with Samsung Electronics at 570% and 33%, and SK hynix at 410% and 38%, far surpassing the market average. This suggests that the semiconductor-driven profit structure remains robust.

AI Investment Continues…"Talk of a Peak Is Premature"

He also dismissed concerns over the semiconductor sector peaking and a slowdown in artificial intelligence (AI) investment raised by some. Capital expenditures (CAPEX) by big tech companies in the United States increased by 81% year-on-year in the first quarter of this year and are expected to expand to 90% in the third quarter.

However, there are also variables in the medium to long term. The free cash flow (FCF) of big tech companies plummeted from USD 51.8 billion in the third quarter of last year to USD 19.1 billion in the first quarter of this year, and if investment expansion continues, there is a possibility of a temporary negative turn in the third or fourth quarter of this year. Afterward, from the first quarter of next year, it is expected to return to positive territory, entering an investment recovery phase.

Semiconductor Circuit Board. AFP Yonhap News

This suggests that "investment peak-out" debates may intensify after 2027, but in his view, there is no need to preemptively reflect this in stock prices or interpret it as excessive fear at this point in time.

"Not a Structural Collapse, but a Short-term Overheating Correction"

Ultimately, the prevailing interpretation is that the recent sharp decline is a process of correcting short-term overheating, not a structural collapse. Considering past patterns, valuations, and earnings forecasts, the current index level is analyzed as being close to a "bottom confirmation phase."

In the market, there is already a "pilgrimage" phenomenon of investors seeking out the report, reflecting a heightened level of confidence in the outlook. However, the concentration on semiconductors and changes in the global liquidity environment remain key variables, so the future direction of the market is likely to be determined by the balance between corporate earnings and the investment cycle.

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