'KOSPI' Stuck for Two Months... Analysts Say to Look Ahead to 2028 [Weekend Money]

Semiconductors Hold the Key to a KOSPI Rebound
"Need to See Earnings Growth in 2028"

An analysis has found that upward revisions to 2028 semiconductor earnings estimates are essential for the KOSPI to rebound after moving sideways in a narrow range for two months.

In its recent report, “Concerns for the Korean Market in October,” Meritz Securities said the Korean market has outperformed global markets, but overall market momentum has weakened compared with the first half of 2026, with the index moving sideways and trading value declining.

While several factors have been cited, the report identified a slowdown in momentum for overall market earnings estimates as a key concern. It noted that earnings forecasts for 2026 have recently leveled off, while the strengthening won has also fueled concerns about downward revisions.

The report pointed to stagnant semiconductor share prices as the fundamental reason the KOSPI has struggled to gain momentum. “Semiconductors, the key to a higher KOSPI, have been unable to break out of a trading range for two months,” said Hwang Suwook, a researcher at Meritz Securities. “A rebound in semiconductors would mean a rebound in the KOSPI. Despite broadly favorable developments for the AI infrastructure industry, upward revisions to major big tech companies’ earnings, and their share prices hitting record highs, Korean semiconductor stocks alone have underperformed.”

“Various reasons are being cited for the weak share prices, but if we return to the core issue, the lack of earnings momentum may be the problem,” Hwang said. “We expect upward revisions to semiconductor earnings estimates during the third-quarter 2026 earnings season, and will be watching for upward revisions not only to next year’s estimates but also to those for 2028.”

“The divergence between earnings estimates for 2026 and 2027 began to emerge around early May 2026, when the semiconductor rally started to gain strength,” he said. “For the rally to continue, consensus needs to support the view that earnings can continue to grow for three consecutive years through 2028.”

“Investment opportunities remain because investor sentiment has not weakened despite high interest rates,” Hwang said. “A comparison of sectoral earnings estimate revisions over the past three months shows strong earnings momentum in IT hardware and home appliances, as well as the electrical and electronics sectors.”

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