JP Morgan raised its 12-month target for South Korea’s benchmark Kospi index to 5,000, saying an AI-powered chip rally and Seoul’s corporate governance reforms could send the market to record highs and potentially to 6,000 in a full-blown bull run.
In a report titled Kospi 5000 on the Cards released Tuesday, the US investment bank said it now expects the benchmark to reach 5,000 within a year, up from its earlier two-year forecast, and urged investors to increase exposure to Korean stocks during market pullbacks.
Despite the recent surge, Korean equities remain undervalued compared with their Asian peers, the bank noted.
The Kospi’s price-to-earnings ratio stands at 13.2 times and its price-to-book ratio at 1.34 times, well below the regional averages of 16.1 and 2.15, respectively.
JPMorgan highlighted a powerful rebound in the memory-chip cycle and Seoul’s reform agenda as key catalysts, saying semiconductors remain the main engine of the market’s upside momentum.
The bank expected that the supply-demand imbalance in the memory market would persist for some time, and buying could rotate from semiconductors into the country’s other sectors, such as finance, holding companies, shipbuilding and defense.
The bank named Samsung Electronics Co. and SK Hynix Inc. as its top picks, alongside Hanwha Aerospace Co., Hyundai Motor Co., Naver Corp., Shinhan Financial Group Co. and Samsung C&T Corp.
The bullish call underscores how rapidly sentiment toward Korean equities has improved amid the global artificial-intelligence boom and soaring semiconductor earnings.
THROUGH THE ROOF
The upbeat forecast came as Korean stocks surged to new highs, lifted by a rally in chipmakers and energy names.
The Kospi jumped 1.8% on Wednesday to close at an all-time high 4,081.15, with gains accelerating after SK Hynix earlier reported record earnings for the third quarter and offered upbeat guidance for next year.
SK Hynix soared 7.1% to 558,000 won ($389.91), pushing its market capitalization above the 400 trillion-won mark for the first time.
The chipmaker posted an operating profit of 11.38 trillion won in the July-September period, up 61.9% from a year earlier, on revenue of 24.45 trillion won, up 39.1%.
Its cross-town rival Samsung Electronics shares rose 1% to 100,500 won apiece.
Samsung C&T, the de facto holding company of Samsung Group that controls stakes in Samsung Electronics, Samsung Biologics Co. and Samsung Life Insurance Co., surged 11.6%.
BROADER GAINS
Gains also extended to other large-cap names, with Naver up 4.7%, Hyundai Motor Co. rising 3%, Kia Corp. advancing 1.9%, LG Energy Solution Ltd. adding 0.8% and Hanwha Ocean Co. up 0.3%.
Doosan Enerbility Co. jumped 11.6% on expectations of expanded South Korea-US nuclear cooperation.
The Kospi rally followed upbeat global sentiment after Nvidia CEO Jensen Huang said AI chip demand remains strong. His comments lifted US semiconductor shares overnight and fueled renewed buying in Seoul.
“The Kospi hit another record as investors piled into chip, nuclear and battery stocks on optimism over the Korea-US summit and Huang’s upbeat remarks on AI demand,” said Lee Jae-won, an analyst at Shinhan Securities Co.
US President Donald Trump arrived in South Korea on Wednesday for the APEC summit in Gyeongju, raising expectations that Seoul and Washington will narrow differences over their trade deal during a bilateral meeting between the two leaders.
In currency markets, the Korean won strengthened, ending at 1,431.7 per dollar, up six won from the previous session.
