KOSPI 11,000 is Possible" Leading Stocks Remain Unchanged | Hong Seon-ae, Lee Kyung-min, Daishin Securities FICC Research Department Head [Yeouido Insight]

Summary

Lee Kyung-min, Head of FICC Research at Daishin Securities, argues that the recent sharp correction in Korean equities is an overreaction and that the KOSPI can rally to 11,000 as earnings rise and valuations hit historic lows. He recommends staying long semiconductors, particularly Samsung Electronics and 소부장, and rotating into undervalued sectors like 2차전지, defense, autos, and shipbuilding. He also sees a rebound trade in internet and biotech once bond yields ease.

• KOSPI forward P/E fell below 7x, near financial crisis levels, while EPS keeps rising; target 11,000+.
• Samsung Electronics Q2 earnings worries are priced in; stock deeply undervalued after sell-off.
• Semiconductors remain the undisputed leaders; AI-driven demand intact, correction is a buying opportunity.
• Semiconductor equipment & materials (소부장) will benefit from almost certain inclusion in the new KOSDAQ Premium Index.
• Rotation into undervalued cyclical sectors: 2차전지, defense, autos, and shipbuilding have strong earnings and low valuations.
• Internet and biotech sectors are oversold on rate fears; expected decline in bond yields in July-August should spark a rebound.
• Foreign selling is a structural default; financial investment flows stay supportive; pension rebalancing fears are overblown.