KOSPI predicted to reach 2,700-2,830 range in 2024

Foreign investment banks predict that Korea’s benchmark KOSPI will rise from 2,700 to 2,830 next year.

According to a report from the Korea Center for International Finance (KCIF), Thursday, five major investment banks have set the year-end target range for the KOSPI at 2,700 to 2,830. This indicates a potential rise of approximately 7 to 12 percent from Wednesday’s closing price of Wednesday, 2,519.81.

Among these banks, HSBC has the highest figure at 2,830, while Goldman Sachs and Citibank both suggest 2,800. On the lower end, Morgan Stanley and UBS have set their figures at 2,700.

In terms of investment stance, HSBC, Citibank and Morgan Stanley recommended a “neutral” approach, whereas Goldman Sachs and UBS advise an “overweight” position.

This optimistic market forecast largely stems from the recent upturn in the semiconductor sector, which is becoming evident in the fourth quarter.

The Bank of Korea reported a 0.5 percent month-on-month increase in the October export price index, primarily influenced by gains in flash memory and DRAM. The Korea Customs Service also noted a 2.4 percent year-on-year increase in semiconductor exports in the first 20 days of November, marking the first rise in 14 months.

According to the report, the memory semiconductor market experienced a substantial decline of over 35 percent this year compared to last year. Nonetheless, a rebound of more than 43 percent is anticipated this year. The report cited Morgan Stanley’s analysis, which predicts that the semiconductor supply shortage may continue throughout the next year and possibly reach its peak in the first half of 2025.

Furthermore, the report predicts that the Korean stock market’s annual earnings per share (EPS) is expected to recover significantly next year, an increase of 61 percent in 2024 after a 33 percent decline this year.

Nonetheless, HSBC offers a more cautious perspective, suggesting that the EPS in the coming year will only mark a 2 percent improvement compared to 2023. It attributed this volatility to its “neutral” outlook.

“Concentration in specific sectors within the Korean stock market signifies that high earnings volatility is likely to persist in the future,” Lee Eun-jae, the associate research fellow of KCIF wrote in the report. “It emphasizes the need for structural changes to enhance investment attractiveness, such as increasing shareholder returns.”