South Korea’s benchmark KOSPI is pushing to fresh records despite uncertainty from geopolitical risks, helped by upbeat calls from global investment banks and heavy foreign buying. Still, a surge in leveraged stock purchases is being cited as a potential source of instability.
According to the Korea Exchange, the KOSPI set two records on the 21st, surpassing both its intraday high of 6,347.41 set Feb. 27 and its previous record close of 6,307.27 set Feb. 26. Foreign inflows that have returned in April continued, with overseas investors net buying 1.7523 trillion won worth of shares on the main board, led by semiconductors. Buying has concentrated in chipmakers as profit estimates for the sector have been raised sharply ahead of SK hynix’s earnings report on the 23rd.
Global investment banks have also been lifting their targets. Goldman Sachs raised its KOSPI target to 8,000, citing improving results for domestic semiconductors and industrials. Nomura kept its target range at 7,500 to 8,000, saying a semiconductor upcycle could offset macro risks.
Even with the broadly positive outlook, some investors worry another sharp pullback like March could return. A key concern is the swelling use of leverage. The Korea Financial Investment Association said outstanding margin loans stood at a record 34.2592 trillion won as of the previous day. Of that, 23.6256 trillion won was on the KOSPI market and 10.6336 trillion won on the Kosdaq market.
Analysts said foreign buying tied to improving fundamentals is supportive, but margin debt above 34 trillion won could become a trigger if prices fall. If declines push collateral ratios below required levels, brokerages can force sales, and a wave of liquidations can deepen losses and set off further margin calls.
Despite those risks, many in the brokerage industry still expect the rally to continue. Lee Jae-won, an analyst at Yuanta Securities, said external factors such as a possible reclosure of the Strait of Hormuz are weighing on markets but are being viewed as part of efforts to gain leverage in negotiations, while extensions of ceasefire deadlines by the Trump administration are reducing volatility. He added that the KOSPI remains in a “deep value” zone on a price-to-earnings basis, leaving room for further gains even after the latest record.
* This article has been translated by AI.
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