[Edaily Reporter Park Sun-Yeop ] Analysts suggest that the KOSPI, which has experienced extreme stock price plunges and supply-demand instability, has now passed through its medium- to long-term bottom range. While a range-bound market is inevitable for the time being due to uncertainties surrounding inflation and interest rates, experts assess that—at current price levels—it is more advantageous to increase exposure to leading artificial intelligence (AI) and semiconductor stocks rather than selling out of fear of further declines.
Kim Yong-gu, an analyst at Yuanta Securities Korea, stated in a report on the 13th, “The market has now passed its true bottom,” adding, “Even while remaining cautious about latent uncertainties, it is advantageous to increase exposure to the market and key strategic alternatives at current price levels.”

The primary rationale is the valuation, which has fallen to historic lows. As of the 10th, the KOSPI’s 12-month forward price-to-earnings ratio (P/E ratio) stood at 6.8x, reaching the level of minus two standard deviations—the statistical extreme of oversold conditions. This is the second-lowest level in history, following the 6.5x recorded during the global financial crisis in October 2008.
Historically, market performance has generally been favorable after the KOSPI’s forward P/E ratio fell below minus 2 standard deviations. Average returns were 2.3% after 4 weeks, 6.6% after 13 weeks, 4.1% after 26 weeks, and 11.2% after 52 weeks. Analysts explain that unless the global economy slips beyond a recession into a crisis affecting the entire financial, foreign exchange, and credit systems, the current valuation is so undervalued that it is difficult to justify.
The recent decline has also reached the threshold seen during major past crises. The KOSPI plummeted from late June to early July, with the maximum decline from its two-year high widening to around 20%. This is similar to the magnitude of declines seen during trend-driven crises such as the 2011 U.S. credit rating downgrade, the 2012 European debt crisis, the 2013 taper tantrum, and the 2019 U.S.-China trade dispute.
Researcher Kim assessed that the market’s irrational overreaction is likely to subside around the 7,300 level on the KOSPI. He also noted that SamsungElectronics(005930)and SK hynix(000660) have both fallen by approximately 20% from their two-year highs, indicating they have entered a zone of excessive correction in terms of price and supply-demand dynamics.
The short-term momentum balance indicator, which reflects the balance between buying and selling forces, has also approached bottom territory. The KOSPI’s 14-day moving average momentum balance indicator stood at minus 0.20% on the 10th, approaching the minus 0.25% level—where selling pressure typically peaks. Analysts suggest that even without a further sharp decline, the index could cross the threshold for a downtrend within a few days as time passes.
However, analysts believe that even if the index does break through the bottom, it will be difficult for it to immediately recover to its previous high. This is because, for the KOSPI to return to a trend of sustained upward movement that surpasses the all-time high of 9,114.6 recorded last month, concerns over high inflation, high interest rates, and further rate hikes by the U.S. Federal Reserve must subside.
Analyst Kim forecast that the domestic stock market would fluctuate within a trading range during the third quarter. He explained that for the market to transition from the current “reflation” phase—where economic recovery and rising prices occur simultaneously—to a “Goldilocks” phase where both the economy and inflation stabilize, there must be clear signals from U.S. inflation data for July and August (to be released in August and September) indicating that inflation has peaked.
The easing of geopolitical tensions in the Middle East and the stabilization of international oil prices at lower levels are also key factors. If oil prices stabilize and the slowdown in the U.S. housing and labor markets leads to a decline in housing costs and service prices, concerns over Fed rate hikes could subside in the fourth quarter, and market interest rates could also fall. Based on this, he emphasized the likelihood of a year-end “Santa rally” in both domestic and international stock markets.
He suggested semiconductors, information technology (IT) hardware, and machinery as sectors to prioritize for investment at the lower end of the trading range. The rationale is that these are high-quality growth stocks capable of sustaining earnings growth despite high inflation and interest rates, and they are sectors that have outperformed the KOSPI in both reflationary and Goldilocks scenarios.
In terms of individual stocks, he highlighted leading AI and semiconductor value chain stocks—including SamsungElectronics, SK hynix, SamsungElectroMechanics(009150), DOOSAN(000150), HANMISemiconductorCO.,Ltd.(042700), LG Innotek(011070), ISUPETASYS(007660), and DaeduckElectronics(353200) —as key investment options. Analyst Kim emphasized, “Focusing on leading AI and semiconductor stocks as the market passes through its trough is the top priority for investment strategy,” noting that the status of existing market leaders remains unchanged.
In the KOSDAQ market, attention was directed toward semiconductor materials, components, and equipment stocks expected to be included in the KOSDAQ Premium Index, scheduled to launch this September. LEENO Industrial Inc(058470), PSK INC.(319660), EO Technics Co., Ltd.(039030), Eugene Technology Co., Ltd.(084370), ISC Co., LTD.(095340), TSE CO.,Ltd(131290), TOKAI CARBON KOREA CO., LTD(064760), Koh Young Technology Inc.(098460), KoMiCo Ltd.(183300), RFHIC CORPORATION(218410), and Hana Materials Inc.(166090) were presented as candidates. The assessment is that policy expectations, stock price recovery, and an influx of buying interest are likely to occur simultaneously around the time of the index’s launch.