[Edaily Reporter Kim Kyung-eun] Riding the tailwinds of the end of the war, the KOSPI has continued its upward trend for the third consecutive day, buoyed by foreign buying. The securities industry views this rebound as more than just a one-off rally, seeing it as the full-fledged start of an earnings-driven market, and is raising its year-end targets one after another.

According to MP Doctor, the KOSPI closed at 8,726.60 on the 16th, up 180.62 points (2.11%) from the previous trading day. Amid continued easing of tensions in the Middle East following the completion of the electronic signing of the U.S.-Iran Memorandum of Understanding (MOU) and President Trump’s dismissal of plans to impose a “Hormuz toll,” risk appetite spread as oil prices, interest rates, and the Volatility Index (VIX) fell in tandem amid a rally in U.S. tech stocks, particularly semiconductor-related shares. Foreign investors made net purchases of 1.5339 trillion won on the day, driving the index higher for the third consecutive trading day.
The securities industry expects the KOSPI rally to continue for the time being. Analysts believe the semiconductor sector’s performance will outweigh interest rate developments.
Daishin Securities significantly raised its year-end target for the KOSPI from 8,800 points to 11,500 points. Lee Kyung-min, an analyst at Daishin Securities, explained, "This figure is calculated by applying the historical median price-to-earnings ratio (PER) of 8.8 times to semiconductor net profits of 605 trillion won and a PER of 15 times to non-semiconductor net profits of 227 trillion won, then summing the results." He noted, “Since early May, semiconductor net profit forecasts have jumped 13.23% over the past month, and the 12-month forward earnings per share (EPS) has also risen from 666.6 points at the end of March to the current 1,056.4 points.” He explained that as long as forward EPS continues to rise, the upside potential for the KOSPI should remain open. He emphasized, "The entry into the 10,000-point era is becoming visible simply through valuation normalization."
This outlook is supported by visibility in the semiconductor sector. Nearly 70% of DRAM transactions for AI servers are trending toward long-term contracts; Microsoft and Google are in talks with #SK Hynix for long-term supply agreements of up to five years, while NVIDIA has begun formal discussions with #Samsung Electronics regarding long-term supply of next-generation AI memory.
Eugene Investment & Securities also joined the consensus, forecasting a "rally back to 10,000." Ahn Ji-sun, an analyst at Eugene Investment & Securities, stated, "We should note that while the KOSPI has fallen 4.2% this month, the 12-month forward EPS has actually been revised upward by 3.9%," adding, "Once earnings momentum is reflected in prices, a stock price rebound is inevitable." Second-quarter KOSPI operating profit is expected to reach 225.4 trillion won, a 231% increase year-over-year.
There are also counterarguments to the prevailing view that interest rate hikes—a key market variable—will hinder the stock market’s rise. Kim Seong-hwan, an analyst at Shinhan Investment Securities, emphasized, “Monetary policy, liquidity, and interest rates are no longer critical variables for stock prices,” stressing that it is not a decline in the P/E ratio but a collapse in EPS that ends a bull market. While falling EPS preceded the stock market crashes in 2018 and 2022, both of which were triggered by Fed tightening, the current assessment is that interest rates are unlikely to undermine EPS. This is because revenue growth rates in AI-related industries significantly outpace corporate bond yields, and the leverage levels of Big Tech companies are minimal compared to those of past market leaders.
However, there are also warnings about the timing of a potential decline in forward EPS. Daishin Securities identified late August to early September as a potential market inflection point. With base effects weighing on forward EPS growth rates starting in the latter half of the third quarter, the firm cautioned that investors should watch for whether Fed Chair Kevin Warsh announces a balance sheet reduction plan at the Jackson Hole Symposium and the possibility of the Federal Open Market Committee (FOMC) formalizing an interest rate hike cycle in September. They also noted that starting in the fourth quarter, the possibility of a shift to a deleveraging market must be considered if liquidity tightening coincides with a rebound in oil prices.
Uncertainties surrounding the final negotiations also remain. Even after the official signing in Geneva, 60 days of detailed negotiations—including issues related to nuclear weapons and uranium—are scheduled to take place, contingent upon Iran’s conditional compliance, such as abandoning nuclear weapons development and transferring highly enriched uranium to a third country. The analyst advised, “Above the 11,000-point level on the KOSPI, a strategy of gradually reducing portfolio beta and increasing the weight of dividend and defensive stocks is effective.”