Samsung Securities says June KOSPI could range from 7,200 to 9,200, urges heavy weighting in AI and semiconductors

[Financial News] Samsung Securities projected that the Korea Composite Stock Price Index (KOSPI) will move in a range of 7,200 to 9,200 next month, while sharply raising its annual upper target from 8,400 to 11,000. It cited the continued artificial intelligence (AI) investment cycle and surging semiconductor export prices as growth drivers. Rising U.S. long-term Treasury yields and the June Federal Open Market Committee (FOMC) meeting were identified as factors that could increase volatility. As an investment strategy, it recommended keeping a high weighting in AI-related sectors.
According to the financial investment industry on the 30th, Samsung Securities Research Center said improving earnings forecasts were behind the upward revision to its annual upper band. Consensus operating profit for the KOSPI 200 Index next year rose 11.8% in a month, from 100.6 trillion won last month to 112.5 trillion won on the 26th. The KOSPI's 12-month expected return on equity (ROE) also climbed from 19.6% the previous month to 22.1%. Reflecting this, Samsung Securities raised its estimate of sustainable ROE from 14.8% to 16.1%.
For this month's KOSPI trend, the firm said the market showed volatility similar to a four-times leveraged product tied to the S&P 500. In a comparison of major stock markets, the KOSPI has risen about 95% year to date, far outpacing the Taiwan Capitalization Weighted Stock Index (TAIEX), which gained 52.8%.
Samsung Securities identified three key global market variables for next month: whether the investment cycle will continue, earnings momentum in the information technology industry, and U.S. inflation and the FOMC.
In semiconductors, the firm said rapidly rising consensus estimates are a burden, but that higher export prices are offsetting the pressure. Citing statistics from policy authorities, the report said the cumulative semiconductor export price through May 20 in the second quarter was up 38% from the first-quarter average. Samsung Securities estimated that the figure will rise by about 50% for the full second quarter.
Consensus second-quarter operating profit for Samsung Electronics and SK hynix was revised up to 8.6 trillion won and 6.2 trillion won, respectively, from the end of March. Based on a pattern in which share-price peaks in semiconductor export-price upcycles have historically formed four to nine months before price peaks on average, Samsung Securities said stock prices are likely to remain strong through June even under conservative assumptions.
Earnings momentum in the global IT sector was also seen as solid. As of May, Korea posted the largest month-on-month upward revision in 12-month expected earnings per share (EPS) among major markets at 21.9%, followed by Taiwan at 5.3% and the United States at 2.2%.
The main risk factor was identified as rising U.S. long-term Treasury yields. U.S. consumer price index (CPI) data for April rose 3.8% from a year earlier, with housing costs and other services contributing more than in the previous month.
The June FOMC will be the first meeting chaired by Kevin Warsh, the new Fed chair. Samsung Securities expects the Fed to cut rates once in December this year. Ilwoo Yang, head of the Global Investment Strategy Team at Samsung Securities Research Center, said, "If the message on the outlook surprises the market in either direction, the path of the benchmark rate could change," leaving open the possibility of greater stock market volatility.
elikim@fnnews.com Kim Mi-hee Reporter