Morgan Stanley Says KOSPI Is Near a Bottom, Sees 9,000 Ahead

[Financial News] Morgan Stanley said the recent plunge in the KOSPI has brought the index close to a bottom and kept its target at 9,000. However, it expects short-term volatility to continue as uncertainty remains over the semiconductor outlook.
According to Investing.com on the 21st local time, Morgan Stanley said in its recently released "Korea Market Strategy" report that "this month's KOSPI correction has been deep, but it is difficult to view it as a technical bear market, and several indicators suggest the index is forming a bottom."
Morgan Stanley estimated that semiconductor stocks accounted for about 70% of the total market-cap decline while the KOSPI fell about 18% this month. That means the semiconductor sector led the index's decline, but the broader market has not entered a structural bear phase.
It also turned slightly more cautious on its outlook. In its base case, the firm kept its KOSPI target at 9,000, but it lowered its bear-market scenario target to 6,000 from 6,500, reflecting the possibility of weaker corporate earnings. It set a projected trading range of 6,000 to 9,000 over the next three to six months.
Morgan Stanley said the 12-month forward valuations for both the KOSPI and the semiconductor sector are now close to historical lows. Still, it expects market volatility to persist for the time being, citing uncertainty over the pace of AI investment, hyperscaler capital expenditures (CAPEX), and semiconductor supply conditions.
As an investment strategy, it maintained a barbell strategy that combines growth stocks and defensive stocks. By sector, it upgraded telecommunications services to overweight and named banks as its top pick.
Information Technology (IT), Industrials, and healthcare were selected as secondary preferred sectors. Within Industrials, defense industry was viewed as the most promising, while shipbuilding, power generation including nuclear power plants (NPP), and overseas construction were also listed as favored sectors.


[email protected] Kim Kyung-min Reporter