Global investment banks are holding to forecasts that South Korea's KOSPI can reach 10,000 even as foreign investors keep unloading large volumes of Korean shares. The stance runs counter to domestic brokerages, which have been cutting their index targets one after another.
Foreign Banks Still See 10,000, Domestic Houses Lower Sights
Major overseas investment banks still expect the KOSPI to break through 10,000, according to the financial investment industry on the 6th. JPMorgan recently set a 12-month KOSPI target of 12,500. Goldman Sachs put its target at 12,000 and Nomura at 11,000.
Domestic brokerages, by contrast, have been revising their targets downward. Daishin Securities (003540) cut its KOSPI target for this year to 9,300 from 11,500. Shinhan Securities (008670) lowered its target to 8,800 from 11,000.
The KOSPI has yet to recover even the 7,000 level. The index cleared 9,300 in June, fueling expectations of a move to 10,000, but has not returned to that level since a sharp drop in July.
Foreigners Sell 200 Trillion Won While Overseas Banks Call It Oversold
Foreign investor flows are also moving in the opposite direction from the optimism of overseas investment banks. Foreign investors have sold a net 200 trillion won worth of KOSPI shares so far this year. In June alone they unloaded nearly 60 trillion won, adding to the index's decline.
The gap has drawn complaints from investors, who say the reports tell them to buy while foreign investors keep selling, and that overseas brokerages do not understand domestic investor sentiment.
The divergence in targets also shows up in individual stocks. Nomura set target prices of 670,000 won for Samsung Electronics (005930) and 4.7 million won for SK hynix (000660). Kiwoom Securities (039490) lowered its targets to 350,000 won for Samsung Electronics and 2.1 million won for SK hynix.
Why Overseas Banks Are Holding to 10,000
Behind the overseas banks' optimism is a view that puts the global semiconductor cycle and medium- to long-term earnings ahead of domestic supply and demand.
Because Samsung Electronics and SK hynix carry heavy weightings in the KOSPI, continued expansion of artificial intelligence investment and a memory chip boom could lift overall index earnings on the strength of those two companies alone. Many analysts also see the recent plunge as a short-term adjustment in flows rather than structural damage to the industry.
JPMorgan said semiconductor indexes and key technical indicators for the Korean stock market have entered oversold territory, adding that the unwinding of AI froth and momentum-driven selling is effectively complete.
Morgan Stanley said the steepest correction seen in the memory industry so far appears to be over, and that current valuations offer an attractive tactical re-entry opportunity.
