Global banks eye Kospi 3,200 breakout

Reform drive, investor enthusiasm fuel upside potential
Major foreign investment banks are turning increasingly bullish on Korea's equity market, with projections suggesting the benchmark Kospi could climb over 3,200 points within the next 12 months, driven by government-led reforms aimed at improving corporate governance and bolstering shareholder protections.
Citigroup raised its 2025 Kospi target to 3,300, up from a previous projection of 2,900, citing President Lee Jae Myung's push to overhaul the chaebol-dominated corporate governance system long blamed for the so-called 'Korea discount.'
The Kospi has gained on nine out of the past 10 trading days this month, delivering a return of 9.36 percent. The main board climbed nearly 30 percent from its low in April.
The bank pointed to planned revisions to the Commercial Act, led by the ruling Democratic Party of Korea, as a potential catalyst for further gains in Korean equities.
'We believe the proposed revisions, if implemented, should pave the way for greater transparency in Korean corporate governance and support stronger shareholder return policies,' Citi said in a report released Wednesday.
The planned legislative changes would require conglomerates with assets exceeding 2 trillion won to adopt cumulative voting. The mechanism allows shareholders to cast all their votes for a single board candidate, enhancing the fairness of board elections and curbing concentrated control by large stakeholders.
JP Morgan also revised its 12-month Kospi target to 3,200 points and upgraded Korea to overweight. The bank cited the country's improving political stability and the potential for structural reforms to unlock long-suppressed value.
Foreign ownership of Korean equities remains around 30 percent, near levels last seen during the global financial crisis, according to JP Morgan. The firm sees corporate governance legislation and progress in US-Korea trade negotiations as potential triggers for a re-rating of Korean assets.
Sectors poised to benefit from the reform agenda include memory chip, finance, defense, holding companies, chemicals and consumer goods, according to the bank.
The broader mood in the market is also being shaped by a resurgence in foreign investor inflows. Korean exchanges reported net foreign purchases exceeding 2 trillion won ($ 1.46 billion) in May, reflecting renewed confidence following the restoration of political stability.
Foreign investors poured about 1 trillion won into the market on each of three consecutive trading days in early June, coinciding with the Kospi's brief rally past 2,900 after the new government took office.
Onshore, investor sentiment remains strong. Domestic cash holdings reached a record high of around 62 trillion won as of June 2025, offering further support for inflows into equities.
Some analysts, however, caution that the recent rally's rapid pace could prompt near-term corrections amid geopolitical tensions and trade-related uncertainties.
Korean brokerages have also started to revise their Kospi forecasts higher. Some now see the index surpassing 3,000 points in the second half of 2025 and into early 2026, reflecting growing confidence in the government's ability to reduce policy risk and advance shareholder-friendly initiatives.
KB Securities now sees the Kospi reaching 3,240 within the next 12 months. The brokerage points to sustained re-rating momentum, with key sectors such as finance, nuclear energy, defense and holding companies driving gains.
'While short-term volatility remains a risk, the structural narrowing of Korea's valuation gap suggests room for further upside in leading names,' said Kim Dong-won of KB Securities.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Korea Herald

9 hours ago

• Korea Herald

Kazakhstan eyes more connection with Korean capital markets: AIFC governor

Kazakhstan is looking for South Korea's capital markets to position the country as a gateway to Central Asia for Korean investors, said Renat Bekturov, governor of the Astana International Financial Center, in an interview with The Korea Herald. The Korean market is one of the most advanced and liquid globally. And with blue-chip companies such as Samsung, the Korea Exchange ranks among the top five worldwide for initial public offering activity, Bekturov noted. He hopes to build institutional links between the capital markets of Kazakhstan and Korea. "We are especially interested in connecting our capital markets, offering Korean investors streamlined access to our financial ecosystem," Bekturov said. According to Bekturov, Korean firms have yet to join AIFC's broker community, but interest from Asian financial institutions — particularly from Hong Kong — is growing, with several firms already joining AIX as trading members. He was in Seoul in April to promote the Kazakh capital market among Korean investors. Beyond finance, Bekturov highlighted Korea's growing industrial presence in Kazakhstan, pointing to Doosan's 300 megawatt gas power plant and upcoming plans to develop a 1,000 MW facility. Hyundai Engineering is participating in multiple regional energy projects, and the AIFC is expanding its outreach through AIFC Connect, aiming to strengthen ties between Asia, Central Asia and the Gulf, with events in Seoul and Hong Kong, according to Bekturov. 'We're here to open doors,' he underlined. 'Korea and South Asia have large, self-sufficient markets, but they're now looking outward for new opportunities and higher returns. Central Asia — and Kazakhstan in particular — offers that.' Citing examples of strong local performance, Bekturov mentioned the IPO of uranium producer Kazatomprom. 'Launched at $11, it peaked at $47 and now trades around $30-35. Including dividends, it's delivered roughly 20-30 percent annual returns,' he said. He also referenced KazMunayGas, a state-owned oil company, whose 2022 IPO has returned close to 40 percent annually. Nearly 4,000 companies are registered in the AIFC, including around 18 Korean firms. 'Many large Korean players like Samsung and Hyundai had already entered the Kazakhstani market before AIFC's launch, but we see growing interest from smaller companies and financial institutions,' Bekturov said. He also highlighted the AIFC's access to regional markets via the Tabadul initiative — a network of exchanges led by Abu Dhabi Exchange. 'Our brokers now offer access to Abu Dhabi, Bahrain and Moscow markets. Through Tabadul, firms in Astana can trade seamlessly across these exchanges,' he explained. The initiative includes the Astana International Exchange and Armenia's Stock Exchange, among others. 'This means that Korean investors connected to AIFC can now access ADX markets, all without leaving their desks,' Bekturov concluded.

Korea Herald

13 hours ago

• Korea Herald

Kospi closes above 3,020 for first time in 3 1/2 years

Postelection optimism fuels sharp rally, lifting hopes of a market renaissance The Kospi did not just return — it roared back. On Friday, South Korea's benchmark index surged past the long-awaited 3,000 mark and kept climbing, closing at 3,021.84, up 1.48 percent from the previous session. It was the first time the Kospi ended above 3,020 since Dec. 28, 2021. The rally seemed modest at the start, with the index opening just 0.29 percent higher at 2,986.52. Retail investors led early gains with net buying, while foreigners and institutions sold into strength, keeping the benchmark tightly anchored below the key level. That restraint vanished once the Kospi cracked 3,000 around 10:45 a.m. Momentum took over, lifting the index past 3,010 by 11:20 a.m. The market stayed buoyant throughout the afternoon, hovering near 3,010, before accelerating again in the final minutes of trading. The Kospi hit an intraday peak of 3,022.06 just before the close, settling near the high of the day. It was a historic session: Not only did the Kospi reclaim the 3,000 level for the first time since January 2022, but total market capitalization hit a record 2,472 trillion won. According to the Korea Exchange, the Kospi first crossed the 3,000 mark on Jan. 7, 2021, peaking at 3,305 in July that year. But post-COVID-19 momentum faded amid a global slowdown and recession fears, pushing the index into a prolonged slump. For much of the past year, it remained trapped in a narrow range between 2,200 and 2,800. Gains were broad-based, with most of the Kospi's top market heavyweights finishing higher. SK hynix and LG Energy Solution each rose more than 4 percent, while Naver surged nearly 7 percent. Hyundai Motor climbed 1.5 percent and Samsung Biologics added 1.7 percent. The tech-heavy Kosdaq also posted solid gains, rising 1.15 percent to close at 791.5. Institutional and foreign investors bought a combined 84 billion won, offsetting retail selling. Friday's milestone extends a two-week honeymoon rally under President Lee Jae-myung's new administration, reinforcing renewed investor confidence despite external headwinds, including Middle East tensions and lingering tariff risks. The Kospi has staged a near-unbroken rally since June 2, the eve of the general election, logging only one down day on June 13. After crossing the 2,700 mark on Lee's first full day in office, the index has jumped 12 percent, buoyed by expectations for policy reform and pro-growth momentum. 'The Kospi reversed course earlier this year as dip-buying resumed and the Trump administration announced tariff deferrals, with the rally gaining further traction around the presidential election,' the Korea Exchange said. 'The launch of the new administration has eased political uncertainty and lifted sentiment on expectations of market-friendly policies.' Analysts say the market is responding sharply to government signals. 'The Kospi's strength is being driven more by expectations of capital market reform and a valuation rerating than by earnings growth,' said Kang Jin-hyeok, analyst at Shinhan Securities. He added that Friday's rally reflected investor optimism following Thursday's unveiling of a 30.5 trillion won ($22.3 billion) supplementary budget. "This, combined with expectations of one or two additional rate cuts later this year, is fueling hopes for increased liquidity in the market.' Market watchers expect momentum to persist, brushing aside concerns of postelection fatigue. 'If current earnings trends hold, the Kospi could reach 3,100 by year-end,' said Noh Dong-kil, strategist at Shinhan Securities. 'And if rising liquidity drives a further rerating in valuations, the index could climb as high as the 3,400 range.' 'Despite the rally, Kospi's valuation remains at a neutral level," said Lee Soo-jung of Meritz Securities, adding, "With stimulus measures such as the supplementary budget and revisions to the Commercial Act upcoming, there's a strong possibility of an overshoot in the Korean stock market.' Lee anticipated foreigners to remain key drivers. After nearly 10 months of net selling, foreign investors turned net buyers in May, purchasing 1.2 trillion won, followed by an additional 5.3 trillion won in June. They remain net sellers of 8 trillion won year-to-date. Still, caution lingers as external risks and a slowing domestic economy continue to pressure sentiment. 'Despite strong policy momentum and supportive catalysts unique to the Korean market, broader fundamentals and external risks — such as weak earnings prospects, trade tensions and geopolitical instability — should not be overlooked,' said Han Ji-young, strategist at Kiwoom Securities. 'A breakout above 3,100 this year is possible, but navigating volatility will be crucial at those levels.'

Korea Herald

14 hours ago

• Korea Herald

[Bio USA] Celltrion deepens global ties, unveils R&D vision at Bio USA

BOSTON — Korean biotech company Celltrion showcased its expanded vision as a next-generation drug developer at Bio USA this week, using the global stage in Boston to deepen ties with international partners and explore cutting-edge biotech collaborations. According to Celltrion on Thursday, the company held more than 150 meetings over the four-day event, engaging in discussions with global pharmaceutical and biotech firms on a wide range of potential collaborations. Over 1,800 visitors stopped by Celltrion's booth during the convention, as announced by the company. Focusing on its core mission of "new drug development" this year, the company concentrated on exploring partnership opportunities to strengthen its pipeline in areas such as antibody-drug conjugates, multispecific antibodies, novel antibody drugs and peptides. The company also held extensive discussions on open innovation initiatives aimed at identifying promising technologies in drug development. Celltrion plans to closely review the meetings from Bio USA to identify potential partners with high growth potential and technical capabilities. In addition, the company said it engaged in wide-ranging talks about expanding its distribution network, receiving collaboration proposals from various companies for drug transportation, storage and other logistical support. Celltrion supplies its biosimilar products through direct sales channels in major global markets. For countries where it relies on indirect sales, the company actively held meetings to strengthen its existing distribution networks. Beyond business meetings, Celltrion also conducted promotional activities throughout the event, such as placing QR-coded brochures throughout its booth to highlight the company's key businesses and major products. Visitors who participated in surveys were offered custom keychains as part of a fun event to drive engagement. 'There was notable interest this year in Celltrion's expansion into the new drug development space,' a Celltrion official said. 'We are committed to securing the best technologies and potential partnerships to advance our pipeline of novel therapeutics. These efforts will reinforce Celltrion's capabilities as it grows into a major global pharmaceutical company.' Celltrion has participated in Bio USA for 16 consecutive years since 2010, continuously seeking global partnerships.