"KOSPI Target Raised to 5,800 for This Year... Upward Trend Expected to Resume in March After February Correction"

Daishin Securities Raises KOSPI Target
"Typical Earnings and Policy-Driven Market"
"Even If It Goes Higher, Time to Rest"
Short-Term Correction Expected in February

Daishin Securities has raised its KOSPI index target for this year from the previous 5,300 to 5,800. Despite the recent liquidity concerns triggered by U.S. President Donald Trump, which may lead to a short-term correction this month due to market overheating and absorption of sell-offs, the prevailing view is that the upward trend will resume in March.

Lee Kyungmin, a researcher at Daishin Securities, explained the background for this upward revision in a report released on February 2, stating, "We have reflected a stronger and faster-than-expected level-up in earnings per share (EPS) in our KOSPI target."

In the annual outlook report for 2026 published in December last year, Lee had projected this year's forward EPS at 428 points. However, he noted that the 12-month forward EPS has already surged to 555 points this month. He attributed this to "the sharp increase in semiconductor profit forecasts," adding, "As a result, despite the KOSPI surpassing the 5,200 mark, the 12-month forward price-to-earnings ratio (PER) has decreased to 9.4 times."

This year’s KOSPI net profit forecast is also expected to increase by 91.8% year-on-year to 396 trillion won. Of this, Samsung Electronics and SK hynix together account for over 80%. Lee explained, "The net profit consensus for both Samsung Electronics and SK hynix for December has been revised up by nearly double."

Accordingly, Lee diagnosed the current KOSPI as being in a typical earnings and policy-driven phase. He analyzed that the upward momentum is likely to be further strengthened by shareholder-friendly policies and share buybacks. He stated, "The correlation between the KOSPI and the 12-month forward EPS is 0.93," and predicted, "The upward trend in the KOSPI will continue until the 12-month forward EPS either stagnates or declines."

He also noted, "We should keep the upper limit for the KOSPI open until the forward EPS starts to decline," and added, "There is a possibility that the third Commercial Act amendment will pass in February, and that major companies will further level up their earnings and accelerate valuation improvements through their general shareholders' meetings in March."

In particular, he forecasted, "The phase of overheating resolution and absorption of sell-offs in February will be limited to a short-term correction, and the upward trend will resume in March."

In his report, "February Stock Market Outlook and Investment Strategy (No Matter How Strong, Rest When Needed... Trump-Induced Liquidity Uncertainty & Passing the Peak of Earnings Season)," also released on the same day, Lee pointed out that "while the potential for further KOSPI gains has expanded to the 5,800 level, at this point, it is necessary to cool off the short-term overheating and absorb sell-offs," emphasizing that a short-term correction is inevitable.

He said, "Trump-induced uncertainty has increased amid deepening short-term overheating and accumulated upward fatigue," and mentioned, "The nomination of former Federal Reserve Governor Kevin Warsh, who is considered hawkish (preferring monetary tightening), as the next Fed Chair has fueled liquidity concerns." He added that the sharp reversals in gold, silver, and Bitcoin, all sensitive to liquidity, over the past weekend were due to this news.

However, Lee predicted, "After February, the upward trend will resume as early as early March, or at the latest by mid-March," citing as reasons: ▲ Confirmation of major companies' participation in the third Commercial Act amendment and at general shareholders' meetings in March ▲ The start of the first-quarter pre-earnings season, renewed upward revisions of earnings forecasts, and a renewed rise in forward EPS ▲ The reintroduction of upward momentum through the announcement of economic stimulus policies in China around the National People's Congress.

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