"KOSPI 5,000 Settlement Hinges on Corporate Earnings... AI Bubble Talk Is Premature"

It has been suggested that for the KOSPI to settle at 5,000 and move beyond, 'the continuous growth of corporate earnings' must be ensured. Contrary to some market concerns, the artificial intelligence (AI) industry is still in its early stages of growth, and there is also an optimistic outlook that the semiconductor boom cycle may last longer than expected.

Jung Eunbo, Chairman of Korea Exchange, is delivering the opening remarks at the "KOSPI 5,000 and Beyond Seminar" on the 3rd at Korea Exchange in Yeouido, Yeongdeungpo-gu, Seoul. Korea Exchange

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Jo Suhong, Head of Research Center at NH Investment & Securities, stated at the 'KOSPI 5,000 Breakthrough Seminar' held at the Korea Exchange Promotion Hall in Yeouido, Seoul, on the 3rd, "AI can be applied across all industries and has strong versatility, so the expansion phase will continue." He added, "An ecosystem is being formed that encompasses both tangible and intangible assets such as semiconductors, data centers, and cloud services." He continued, "Currently, the proportion of private investment in AI relative to GDP is not excessive, even when considering future investment plans by big tech companies," and explained, "Until 2028, the structure in which demand exceeds supply is expected to persist."

Jo also said, "Growth stocks in Korea and the United States have tripled since the COVID-19 pandemic," and "Despite the sharp rise in stock prices, the current KOSPI does not face significant valuation pressure due to profit growth in the semiconductor industry. Improved credibility in the future could provide further upside potential in terms of valuation."

He cited the following as prerequisites for the KOSPI 5,000 era: ▲ the momentum for continuous growth in corporate earnings, ▲ structural changes in the Korean capital market, and ▲ trust in the US asset market.

Jo added, "There are concerns about the semiconductor business cycle, but considering the irreversibility of AI investments, the diversification of applications, and the widespread adoption of AI among users, it is believed that earnings visibility can be secured."

On the 3rd, the 'KOSPI 5,000 and Beyond Seminar' is being held at the Korea Exchange in Yeouido, Yeongdeungpo-gu, Seoul. Photo by Chunhan Lim

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Kim Hakgyun, Head of Research Center at Shinyoung Securities, said, "Although stock prices have surged, there is little evidence to call our stock market a bubble," adding, "The price-to-earnings ratio (PER) is just over 10 times, and the price-to-book ratio (PBR) is the lowest in the world." He emphasized, "Valuations in Korea are still being discounted, but the KOSPI 5,000 level is not unsustainable compared to corporate earnings and asset values."

Kim noted, "The global market rebounded starting in 2023, but we merely moved sideways in 2023 and 2024. If you look at just one year, it seems like we've risen a lot, but over a longer period, it's just making up for previous underperformance."

Kim also said, "Everyone knows that if money is tied up in real estate, the economy will struggle in the long term. If stocks gain the trust of people as an alternative, there will be many positive effects for the Korean economy."

On the 3rd, the 'KOSPI 5,000 and Beyond Seminar' is being held at the Korea Exchange in Yeouido, Yeongdeungpo-gu, Seoul. Photo by Chunhan Lim

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Jung Eunbo, Chairman of Korea Exchange, stated in his opening speech, "We will advance market systems based on AI and strengthen the removal of insolvent companies to solidify market trust." "Now, our task is to move beyond KOSPI 5,000 and advance to a premium market based on trust and innovation."

Jung added, "We will strengthen the capital market's role in productive finance," and, "To vitalize venture capital, we will promote the listing of advanced innovative companies, and seek qualitative improvements in the capital market through market structure reform and programs to enhance corporate value."

Jung also stated, "We will enhance the competitiveness of the capital market," and, "By modernizing market infrastructure such as extending trading hours, shortening clearing and settlement cycles, and advancing disclosure and dividend procedures, we will take the lead in the global liquidity competition."

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