[Edaily Reporter Kim Kyung-eun ] Forecasts suggest that the KOSPI, after hitting a low for the month, could recover to the 7,100 level by the first half of next year. This is based on the view that concerns over a reduction in investments in artificial intelligence (AI) data centers—which surfaced following the U.S. midterm elections—have been overreacted to compared to reality. Given that the KOSPI’s valuation (the ratio of stock price to corporate value) has now entered a historically undervalued range, experts advise investors to gradually accumulate shares in the 4,600–5,000 range.

Lee Kyung-min, an analyst at Daishin Securities, stated in a report on the 10th, “Once market misunderstandings are cleared up, the market is expected to normalize by the first half of 2027 after passing through the November low.” He explained that a full-fledged recovery in stock prices could begin once market concerns about a decline in total AI investment are alleviated and interest rates and inflation stabilize.

According to Daishin Securities, the KOSPI’s 12-month forward price-to-earnings ratio (P/E ratio) stands at 3.54x, falling below 4x for the first time since 2001. The forward price-to-book ratio (PBR) has also fallen to 0.95x. Analysts note that, based on an evaluation considering the relationship between return on equity (ROE) and PBR, the market has entered a zone of extreme undervaluation, trading at an 83.4% discount to its fair value.

Daishin Securities estimates that even if the KOSPI’s forward P/E ratio recovers to just 5 times, the index could reach around 7,146. This is close to the upper end of the projected range for the first quarter of next year, which is 6,000 to 7,500. Applying a forward P/E ratio of 4 times yields a level of 5,717, while applying 6 times results in 8,576.

The firm cited excessive concerns over tighter U.S. data center regulations as the cause of the recent stock market plunge. Following the Democrats’ victory in the U.S. midterm elections, fears spread that new data center construction would be halted and the scale of AI investment itself would shrink. However, the firm explained that actual policy changes are likely to focus on delaying new permits and moderating the pace of investment.

In particular, while there is a possibility that data center regulations could tighten in key states such as Texas, Georgia, and Ohio—where the Democrats have secured new gubernatorial seats—the analysis indicates that a governor’s authority to halt such projects is limited to new approvals at the state level. Legislation to reduce tax incentives or halt construction requires the approval of the state legislature.

There are also no clear signs yet that the scale of AI investment itself will shrink. Daishin Securities cited the fact that the 2027 capital expenditure (CAPEX) market forecasts for the five major Big Tech companies were actually revised upward by 1.2% following the midterm elections. This implies that even if data center construction schedules are delayed in some cases, the demand for AI itself will not disappear.

Accordingly, Daishin Securities estimated the probability of the KOSPI’s base-case scenario materializing at 60%. It recommended using the volatility observed in the 4,600–5,000 range as an opportunity for gradual buying. While foreign selling and supply-demand instability in AI-related sectors may persist in the short term, the firm believes there is significant room for a medium- to long-term rebound, as the market has already overreacted to concerns about a slowdown in AI investment.

The firm identified the end of January next year as a key turning point that will determine whether the stock market recovers. The firm explained that if major Big Tech companies revise their capital expenditure plans downward and semiconductor contract prices fall as low as those in the first quarter of 2027, additional shocks could be inevitable. However, it classified this as a “tail risk” with a 10% probability of occurrence. Tail risk refers to a risk that, while unlikely to occur, could cause significant market disruption if it materializes.