Is Now a Buying Opportunity? Bold Forecast Predicts KOSPI Could Reach 7,500

KB Securities has set the 2025 KOSPI target at the 5,000 level and projected that, should a prolonged bull market continue, the index could reach as high as 7,500.

On November 6, KB Securities stated in its report, "KB Strategy - KOSPI, a Pause in the Major Bull Market," that it views the upcoming short-term correction in the KOSPI as a pause within the larger upward trend.

The report analyzed the three major bull markets in the Korean stock market over the past 30 years (1998, 2009, and 2020), noting that during these periods, the KOSPI experienced average corrections of -14% over about one month, followed by sharp rebounds. It cited the 1998-1999 bull market as a notable example, where the KOSPI rebounded to nearly double after a short-term correction of -22%.

The current KOSPI correction is assessed as similar to the situation in April 1984, during the "three lows" boom. At that time, the KOSPI fell by 10.9% over a one-month period, while the S&P 500 also declined by 5%. After a sharp drop in April 1986 and a subsequent three to four weeks of sideways movement, the KOSPI began to rebound sharply once again.

The recent debate comparing the 2025 artificial intelligence (AI) industry to the 1999 dot-com bubble is considered premature. This is because the market environment driven by U.S. government policy and the fundamentals of dot-com companies in 1999 are clearly different from the present. In 1999, the United States was entering a period of interest rate hikes and maintained a budget surplus, implementing tight monetary policy-contrasting with the current expansionary monetary and fiscal policies in 2025. In addition, the average price-to-earnings ratio (PER) for dot-com companies in 1999 was 60, whereas the average PER for AI companies in 2025 stands at just 30, half the previous level. The report particularly emphasized that, considering the inflection points in global IT industry growth over the past 40 years, AI represents the third industrial revolution after PCs (Internet) and mobile (iPhone). Both the PC and mobile industries enjoyed long-term high growth for 10-15 years after their emergence. Since only three years have passed since the public release of GPT in November 2022, and the AI expansion cycle is just beginning, comparing the AI industry to the dot-com bubble is seen as an unrealistic perspective.

KB Securities presented a 2026 KOSPI target of 5,000 points, viewing this as the start of the third long-term bull market in the 50-year history of the Korean stock market. The 2025 bull market is attributed to valuation expansion resulting from the "three lows" boom and the start of a new KOSPI earnings cycle, marking the first major bull market in 40 years since 1985. In the long-term bull market scenario, the KOSPI could rise to 7,500 points, although this may be revised depending on future earnings outlooks. This projection is based on the expectation that, as the price-to-book ratio (PBR) valuation multiple expands rapidly due to the "three lows" boom, the KOSPI's operating profit in 2026-driven by semiconductors and electric power-is forecast to reach a record high of 401 trillion won, up 36% year-on-year, which is expected to fuel the KOSPI's rise to all-time highs.

KB Securities identified semiconductors, nuclear power, defense, and securities as strategic sectors for the KOSPI, and recommended Samsung Electronics, SK Hynix, Doosan Enerbility, Korea Electric Power Corporation, Hyundai Engineering & Construction, Hyundai Rotem, and Korea Financial Group as top picks.

Kim Dongwon, Head of Research at KB Securities, stated, "The current KOSPI PBR is 1.4 times, which is discounted by -60% compared to the global average (3.5 times), -37% compared to Asia (2.2 times), and -21% compared to Japan (1.7 times). Despite the recent rise, the KOSPI will continue to stand out as an attractive investment destination for global investors, and there is ample room for long-term growth."

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