KOSPI Upper Target Raised to 5,800 on Upgraded Semiconductor Earnings Outlook... Earnings-Driven Rally Intact

The KOSPI target for the first half of the year has been raised to the 5,800 level. Analysts say that as earnings forecasts, centered on the semiconductor sector, are rising rapidly, the level of 12-month forward earnings per share (EPS) has increased earlier than expected, pushing up the upper bound of the index. As the pace of increase in forward EPS offsets valuation burdens, a structure has formed in which the forward price-to-earnings ratio (PER) has actually declined even though the index has surpassed the 5,200 level. With room remaining for "normalization" toward its historical average PER level, some diagnose that even if a short-term correction occurs, the likelihood of the overall trend being damaged is limited.

The center of gravity of earnings improvement is concentrated in large-cap semiconductor stocks, and it is estimated that most of the projected net profit of the KOSPI in 2026 will come from this sector. The current market is a phase where earnings momentum and policy momentum are overlapping, and there is a view that the upper bound of the index should remain open until forward EPS starts to turn downward. In the short term, a process of cooling off excessive heat is considered inevitable, but the possibility of an uptrend resuming after March is being discussed. From a mid-term perspective, a "pace control" strategy is suggested: maintain or increase equity exposure overall, but once the index exceeds the 5,800 level, gradually raise the weight of dividend and defensive stocks while managing volatility.

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