KOSPI Breaks Prewar High, Hits All-Time Record at 6,388.47

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[The Financial News] The KOSPI Composite Index, which had been volatile amid the Middle East war, surged to a new all-time high and moved close to the 6,400 level on strong buying from foreign investors and institutions. With earnings forecasts for KOSPI-listed companies being revised upward, the market still appears to place more weight on Korea's undervaluation than on concerns about a near-term peak.
According to the Korea Exchange (KRX) on the 21st, the KOSPI Composite Index closed at 6,388.47, up 169.38 points, or 2.72%, from the previous trading day, setting a new record high. This marked the first time in a little over two months that the index simultaneously broke its intraday and closing records. The previous closing high was 6,307.27, set on Feb. 26, while the prior intraday high was 6,347.41, reached on Feb. 27.
Foreign investors and institutions drove the index higher on the day. They bought a net 1.3348 trillion won and 737.9 billion won, respectively. Retail investors, meanwhile, sold a net 1.9209 trillion won as they locked in profits.
SK hynix Inc. touched an intraday record of 1,227,000 won on expectations of strong earnings, setting a new all-time high. The stock closed at 1,224,000 won, up 58,000 won, or 4.97%, on the day.
Backed by record earnings from Samsung Electronics Co., Ltd. and SK hynix Inc., KOSPI-listed companies are expected to post the best operating profit figures ever. Operating profit for KOSPI-listed firms this year is projected to reach the 700 trillion won to 800 trillion won range, up roughly 160% to 180% from a year earlier.
Amid those earnings expectations, global investment banks have also been raising their targets for the domestic market one after another. Goldman Sachs lifted its 12-month target for the KOSPI Composite Index from 7,000 to 8,000, while JPMorgan Chase & Co. raised the upper end of its KOSPI target from 7,500 to 8,500.
Market watchers say there is still room for further gains, as the KOSPI forward price-earnings ratio remains below 8 times. In the brokerage industry, a forward PER below 8 times is generally viewed as an undervalued zone.
Lee Jae-won, a researcher at Yuanta Securities Korea Co., Ltd., said, "The KOSPI's 12-month forward PER stands at 7.47 times, placing it in a deep-value zone that falls below the bottom 1% of PER levels over the past 20 years," adding, "Even after the index has hit a new high, the upside remains open."
A steady inflow of funds driven by market revitalization policies is also expected to support the rally. Lee Sang-yeon, a researcher at Shinyoung Securities Co., Ltd., said, "Market revitalization policies are seen as measures that simultaneously encourage changes in household asset allocation and improve market liquidity," adding that "over the medium to long term, they will likely help ease the valuation discount on the domestic stock market." Meanwhile, the KOSDAQ closed at 1,179.03, up 4.18 points, or 0.36%, from the previous session, leaving it just 13.75 points below its all-time high of 1,192.78.
jisseo@fnnews.com Seo Min-ji Reporter