Target-Price Cuts Outnumber Upgrades for First Time in 15 Months

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "AI-based customized news recommendation and summary service" developed with support from the Korea Press Foundation. It selects and provides six tailored news items for each reader type.

1. Target-Price Cuts Outnumber Upgrades for First Time in 15 Months

- Key Summary: Among last month's brokerage reports, those lowering target prices reached about twice the number of those raising them, marking a downward-dominant trend for the first time in 15 months. Through the first half of this year, reports raising target prices had greatly exceeded those lowering them each month, but the mood reversed as the KOSPI plunged 22.19% in July, leading to re-examinations of earnings and valuations. While target prices for major stocks such as Samsung Electronics and SK hynix were successively lowered, investment opinions were upgraded in more cases than downgraded. Major investment banks including Morgan Stanley and Goldman Sachs have released analyses suggesting substantial room for further gains in the domestic stock market.

2. No Sidecar Even as KOSPI Drops 5%; Surging Samsung, Hynix Plunge 8%

- Key Summary: As Samsung Electronics and SK hynix each fell in the 8% range, the KOSPI index also closed down 5.12% at 6,257.45. The two stocks were analyzed as facing a flood of profit-taking following their surge on the previous trading day, and despite the large KOSPI decline, a sell sidecar (a system that temporarily halts program trading orders) was not triggered. On the day, foreign investors and institutions net sold 2.8429 trillion won and 1.9477 trillion won respectively, while individual investors net bought 4.6531 trillion won worth, absorbing the volume. By contrast, the KOSDAQ index rose 2.44%, triggering a buy sidecar, showing a clear temperature difference within the market.

3. Why Buy KOSDAQ Active ETFs? Not Only No Alpha, but Bigger Losses Than the Market

- Key Summary: KOSDAQ active exchange-traded funds (ETFs) failed to generate excess returns beating their benchmarks—so-called "alpha"—and instead recorded bigger losses than the market. Major KOSDAQ active ETFs underperformed their benchmarks on both a one-week and one-month basis, with the gap widening over time. Active ETFs are products in which managers actively adjust the weighting of stocks to pursue excess returns, charging higher management fees than ordinary passive ETFs, but their differentiated strategies proved ineffective in the recent sharp downturn, according to assessments. Amid this, some asset managers are newly introducing covered call strategies that utilize volatility, seeking alternatives.

4. No. 1 Samsung's Super-Gap Bargaining Power: No Ceiling, Reflecting Market Prices for the Most Favorable Terms

- Key Summary: With the long-term supply agreement (LTA) terms of the three memory chipmakers riding the AI super-cycle revealed, analyses suggest Samsung Electronics secured the most favorable structure. Samsung Electronics set a price floor to establish a foundation for maintaining stable earnings even amid a demand plunge, while setting no ceiling, giving it a structure that can maximize profits during price upturns. SK hynix adopted a flexible method to respond to price volatility, while Micron signed a strategic customer agreement (SCA) setting both a ceiling and a floor, giving it a relatively limited structure for profit maximization. Ahead of the memory peak season in the second half, with product prices continuing their steep climb, the view that Samsung Electronics' earnings will exceed market expectations is gaining traction.

5. Comprehensive Real Estate Tax Above 2 Billion Won; Jumps 4-fold for Non-Residents

- Key Summary: The government announced its "2026 Tax Reform Plan," which newly includes owner-occupier single-home owners holding homes worth more than 2 billion won in market value as subject to comprehensive real estate tax starting next year. While the basic deduction for owner-occupier single-home owners will be raised from 1.2 billion won to 1.4 billion won, the basic deduction for non-resident single-home owners will be lowered to 900 million won, and the fair market value ratio will also be raised from 60% to 70%, in a direction that increases the tax burden. The comprehensive real estate tax for a non-resident single-home owner holding a home worth 2 billion won will increase 4.1-fold from the current level as of next year, and is projected to swell up to 5.5-fold by 2028. The government presented "taxation normalization," under which the tax burden grows larger the more expensive the home, as the goal of this reform.

6. Buy the Main Stock, Sell the Leverage: Single-Stock ETF Trading Value Drops 94%

- Key Summary: Following the measure raising the basic deposit for single-stock leveraged and inverse products from 10 million won to 30 million won, trading value for the related products plunged to about one-tenth of the level on the day just before the system took effect. Trading value by individual investors fell 93.8% due to the deposit increase measure, showing investment sentiment cooling rapidly. Even though the main stocks of Samsung Electronics and SK hynix plunged, individual investors—unlike their previous practice of counter-trend trading—net sold the leveraged products, and a substantial portion of the funds they sold off is estimated to have moved into buying the main stocks. Financial authorities expect the market capitalization of single-stock-related products to gradually decline.