KOSPI is Historically Undervalued... But Why You Shouldn't Rush to Buy Now

Summary

Mok Dae-gyun, CEO of KCGI Asset Management, analyzes the recent sharp market decline in Korea. He explains that while KOSPI and memory chip stocks like SK Hynix and Samsung Electronics are historically undervalued, short-term downward momentum remains strong. He advises a medium-term buying approach, expecting positive returns over 6-12 months, and dismisses fears over AI capex sustainability and Chinese memory competition as overblown.

• KOSPI trades at 5x PE versus historical 10x, signaling deep undervaluation.
• Short-term momentum is negative and cannot be overcome by valuation alone; risk-cutting is appropriate for very short horizons.
• For investors with a 6-12 month horizon, current levels offer an attractive entry point with a high probability of positive returns.
• SK Hynix and Samsung Electronics are exceptionally cheap at 4-4.5x PE, with tight memory supply supporting earnings.
• AI capex plans remain intact; big tech is still increasing investment, alleviating fears of a premature cycle end.
• CXMT threat is exaggerated; China's memory technology lags at least 2-3 years behind and does not pose an immediate threat.
• Nvidia circular financing fears and negative narratives are largely noise and do not derail the AI investment thesis.
• Power grid bottlenecks are a real risk for AI rollout, but the guest does not see this as a reason to enter power-related stocks now.