Morgan Stanley has stated that the recently plummeting KOSPI is nearing its bottom, maintaining its target of 9000. However, it noted that corporate profit growth may slow, suggesting that the index could drop to 6000 in a bear market scenario.
According to a report released on July 21 by Investing.com, Morgan Stanley's 'Korea Market Strategy' report indicated that the recent sharp decline in the KOSPI does not necessarily signal the onset of a full-blown bear market. The report stated, "Various indicators suggest that the potential for further declines in the stock market is limited."
This month, the KOSPI has fallen 18%, with semiconductor stocks accounting for approximately 70% of the total market capitalization loss. Analysts believe that the concentrated sell-off in semiconductor shares has exacerbated the index's decline.
The firm has kept its base target at 9000 but has lowered its bear market scenario estimate from 6500 to 6000, reflecting the potential slowdown in corporate profit growth. It projected a trading range of 6000 to 9000 over the next 3 to 6 months.
In a report from June 23, the firm had previously set a base scenario of 9000, a bull market target of 10,500, and a bear market target of 6500.
Currently, the stock price levels based on the expected performance of the domestic stock market and semiconductor stocks over the next 12 months are assessed to be close to historical lows. However, uncertainties surrounding investments in artificial intelligence (AI), the scale of investments by large data center companies, and semiconductor supply forecasts may lead to significant stock price volatility in the near term.
As for investment strategy, the firm recommends a mix of high-growth technology stocks and defensive stocks that are relatively resilient to economic fluctuations. Sector-wise, it has rated the banking sector as the most promising and raised its investment opinion on telecommunications services to 'increase allocation.'
It maintains a positive outlook for information technology, industrials, and healthcare. Among industrials, it rated the defense industry the highest, followed by shipbuilding and power generation/nuclear power, as well as overseas construction.
* This article has been translated by AI.
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