"KOSPI Rises 1,000 Points on Scaling Up Efforts Alone... Next Growth Sectors After Semiconductors: Energy, Batteries, Automobiles, Bio"

Despite the war risk between the United States and Iran, the KOSPI has remained in the high 5,000 range. According to recent estimates, efforts by the government and companies to scale up (increase corporate value) alone have contributed to a rise of approximately 1,000 points in the index. Analysts now believe that, with the KOSPI having reached a higher level, the possibility of the index returning to its previous box range is low.

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On April 12, the Shinhan Institute for Future Strategy at Shinhan Financial Group released a report titled "Conditions for Structural Transformation of the Korean Stock Market," which attributes the recent KOSPI rally to a combination of the government's value-up policy and a semiconductor supercycle driven by artificial intelligence.

In particular, the report estimates that the value-up program alone contributed approximately 1,000 points to the index. According to the report, the price-to-book ratio (PBR) of KOSPI-listed companies rose from 0.85 before the value-up program to 1.4 after, an increase of 0.55. Of this, semiconductors accounted for 0.35, while the value-up program accounted for 0.2. When translated into KOSPI index points, this equates to a boost of about 1,000 points.

The report states, "If the exit of marginal companies becomes established as value-up initiatives are strengthened going forward, the likelihood that the KOSPI will return to its previous box range of 1,500 to 3,000 is low."

However, the institute notes that for the KOSPI to maintain its upward trajectory, three structural conditions must be met in addition to value-up efforts: reducing earnings volatility, fostering a long-term investment culture, and discovering new growth drivers.

The institute added, "To address the current structure, which is overly concentrated in a single cyclical sector such as IT and semiconductors, it is necessary to diversify revenue models through the platformization of manufacturing and to realign portfolios by divesting non-core businesses. The average holding period of domestic individual investors' portfolios is only nine days, and the supply-demand structure is heavily skewed toward short-term trading with a high risk appetite, both of which need improvement."

Furthermore, the report highlights next-generation growth industries that could drive the KOSPI after semiconductors: energy (SMR and renewable energy), batteries (all-solid-state and ESS), automobiles (SDV and autonomous driving), and bio (AI-based drug development), as well as defense and shipbuilding. The financial sector, it suggests, should provide substantial support from the early stages of these businesses.

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