[E-Daily Reporter Park Sun-Yeop ] Although the KOSPI has fallen below key moving averages due to a sharp short-term decline, analysis suggests that its valuation appeal has increased compared to the time of the financial crisis. While the index has slipped to the 7,200 level due to a combination of excessive concentration in the semiconductor sector and the unwinding of leveraged investments, corporate earnings outlooks are actually improving, leading to the assessment that a strategy of buying in installments is effective at the 7,000 level.
Lee Kyung-min, an analyst at DaishinSecurities, stated in a report on the 9th, “This sharp decline is largely due to a supply-and-demand shock caused by a combination of excessive concentration in the semiconductor sector and the unwinding of leveraged investments, rather than a deterioration in corporate earnings,” adding, “The KOSPI is currently in a historically undervalued phase.”

Buoyed by the semiconductor and artificial intelligence (AI) rally through June, the KOSPI reached an intraday high of 9,385.59—an all-time record—but volatility has increased since late June, causing the index to drop to the 7,200 level in July. The decline from its peak exceeded 20%, and the SamsungElectronics(005930)and SK hynix(000660)—which had led the bull market—also corrected by 25.9% and 30.5%, respectively, from their June highs. During this process, investor sentiment and supply-demand volatility widened significantly, including the triggering of the sixth circuit breaker of the year.
DaishinSecurities assessed that fundamentals remained intact despite the sharp decline in the index. As of the 8th, the KOSPI’s 12-month forward earnings per share (EPS) stood at 1,174 points, actually up from 1,105 points at the end of June. The medium- to long-term earnings outlooks for SamsungElectronics and SK hynix are also being revised upward. While stock prices have fallen, earnings forecasts have improved, causing the KOSPI’s 12-month forward price-to-earnings ratio (PER) to drop to 6.17 times. This is lower than the trough of 6.27 times recorded during the global financial crisis, when the KOSPI fell below the 1,000 mark.
The analyst assessed, “Since the index has fallen below a key support level, it may take some time for a trend reversal to occur, but this is a level where even minor positive news could trigger a sharp rebound.” In particular, the analyst explained that although the KOSPI faced the risk of falling below the 5,000 mark in late March and early April due to Middle East risks, a sharp rise in oil prices, and pressure from interest rates and exchange rates, it subsequently staged a strong rebound as expectations for a ceasefire coincided with robust semiconductor exports.
The firm identified the U.S. Consumer Price Index (CPI) for June, to be released on the 14th, and the second-quarter earnings season as key turning points ahead. DaishinSecurities predicted that the June CPI could slow to 3.92% year-over-year, down from 4.2% in May. The firm explained that if inflationary pressures ease, it could create cracks in concerns over interest rate hikes and the trend of a strong dollar, potentially leading to a downward stabilization of bond yields and the U.S. dollar.
Earnings season was also cited as a potential catalyst for a turnaround. The analyst stated, “During the second-quarter earnings season, we expect strong results not only from the semiconductor sector but also from other sectors and export-oriented stocks,” adding, “If broad-based earnings improvement materializes, driven by export momentum and exchange rate effects, it could lead to a reduction in the KOSPI’s concentration of gains and strengthen its upward momentum.”
By sector, the number of sectors that have entered undervalued territory due to recent corrections has increased significantly. According to DaishinSecurities, 18 sectors were undervalued relative to their earnings on a weekly basis, 20 on a monthly basis, and 21 on a three-month basis. Notably, the semiconductor sector—which had been overvalued on a one-month and three-month basis—has shifted into undervalued territory, while IT hardware and semiconductors showed the greatest undervaluation appeal on a weekly and monthly basis. Sectors such as machinery, semiconductors, IT and home appliances, shipbuilding, construction, energy, and chemicals were also classified as undervalued based on weekly, monthly, and three-month change rates.
The analyst stated, “We view the recent sharp decline as a short-term correction within a medium- to long-term uptrend,” adding, “Investors with a high equity allocation should hold their positions, while those with a high cash allocation need to implement a strategy of gradually buying and accumulating leading stocks starting from the current index level to prepare for the KOSPI entering the 10,000 era.” He continued, “Even if the KOSPI falls below the 7,000 level, we view this as an undershooting phase,” adding, “A buying strategy that capitalizes on volatility is necessary.”