Samsung Securities forecasts a KOSPI upper target of 12600 for the second half, raising its sustainable return on equity (ROE) assumption to 17% and applying a 3x price-to-book ratio (PBR). The brokerage attributes the bullish outlook to continued semiconductor sector earnings momentum, with semiconductors expected to account for 87% of KOSPI 200 operating profit growth through 2027. Yang Il-woo, team leader at Samsung Securities Research Center, stated that financial and domestic demand sectors are expected to join the rally in Q4 as Korea's nominal GDP growth accelerates into double digits over the next 12 months. The report sets a lower bound of 8400, corresponding to an 8x price-to-earnings ratio (PER), with short-term correction to 8000 possible if market volatility expands. Samsung Securities' second-half Korea stock market outlook positions semiconductors as the primary earnings driver, with broader sector participation anticipated later in the year.
Samsung Securities Sets KOSPI Range 8400-12600 for Second Half
Samsung Securities' 'Second Half Korea Stock Market Outlook and Strategy' report presents a KOSPI range of 8400-12600 for the second half. Yang Il-woo explained that the upper target of 12600 applies a sustainable ROE assumption raised from 16.3% to 17% and a 3x PBR. The current KOSPI 12-month forward ROE of 23.3% is expected to exceed 24% during Q3.
The lower bound of 8400 corresponds to an 8x 12-month forward PER. Samsung Securities cited that over the past 20 years, excluding this year, KOSPI has not traded below an 8x PER for more than three consecutive weeks on a weekly basis. The report noted that if market volatility expands, a short-term correction to the 8000 level remains possible.
Semiconductors to Account for 87% of KOSPI 200 Profit Growth Through 2027
Samsung Securities forecasts that the semiconductor sector will drive earnings momentum in the second half. KOSPI 200 companies' 2027 operating profit is estimated to increase approximately 31% year-over-year. Of the approximately 283 trillion won increase, 87% — equivalent to 246 trillion won — is concentrated in the semiconductor sector.
The report assessed a high likelihood of further upward revisions to semiconductor sector second-half earnings forecasts. Current semiconductor company operating profit consensus is evaluated as achievable even if semiconductor prices do not rise significantly in the second half. Yang stated, "This means the current consensus carries no burden."
Financial and Domestic Demand Sectors Expected to Rally in Q4
Samsung Securities analyzed that earnings forecasts for financial sectors including banks and securities, as well as domestic demand sectors, have room for further upward revision as Korea's nominal GDP growth is likely to record double-digit growth over the next 12 months.
Yang forecasted, "We expect a continued bull market in Korean stocks in the second half. Semiconductor and other AI value chain-related sectors are expected to maintain strength through Q3, and warmth may spread to domestic demand sectors in Q4."
Market Variables Include US Inflation and Valuation Normalization
Samsung Securities identified market variables as: ▲US inflation stability, ▲potential for further upward corporate earnings forecast revisions, ▲valuation normalization. The report anticipated that the burden of the Federal Reserve's monetary policy on the stock market will be limited, as the US Consumer Price Index (CPI) growth rate is likely to slow due to reduced tariff effects and stable oil prices. The forecast stated that even if the base rate is raised once in the short term, the domestic stock market's upward trend will not be undermined if long-term inflation expectations stabilize.
Regarding the valuation debate, Yang stated, "The reason global stock market valuations are not rising is likely because investors are removing valuation premiums for big tech and software companies while not reducing discounts for semiconductor companies." He added, "As semiconductor companies' earnings stability improves, valuation enhancement will be possible," and noted, "Much controversy may actually be an opportunity."
Top 10 Stock Picks Include Samsung Electronics and SK Hynix
Samsung Securities presented 10 top stock picks for the second half: Samsung Electronics, SK Hynix, Samsung Electro-Mechanics, Doosan Enerbility, Hyosung Heavy Industries, SK Telecom, APR, Korea Financial Group, Samsung E&A, and Shinsegae. The breakdown includes 3 IT sector stocks, 3 industrials, 2 consumer discretionary stocks, 1 financial stock, and 1 communication stock.
Target prices are: Hyosung Heavy Industries at 4.3 million won (highest), SK Hynix at 3.5 million won, Samsung Electro-Mechanics at 1 million won, Shinsegae at 565,000 won, APR at 510,000 won, and Samsung Electronics at 500,000 won.
FAQ
What is Samsung Securities' KOSPI target range for the second half?
Samsung Securities forecasts a KOSPI range of 8400-12600 for the second half. The upper target of 12600 applies a 17% sustainable ROE assumption and 3x PBR, while the lower bound of 8400 corresponds to an 8x 12-month forward PER. Short-term correction to 8000 is possible if volatility expands.
Why does Samsung Securities expect semiconductors to drive Korean stock market gains?
Samsung Securities estimates that semiconductors will account for 87% (246 trillion won out of 283 trillion won) of KOSPI 200 operating profit growth through 2027. The report assesses that semiconductor sector earnings forecasts have room for further upward revision, as current consensus is achievable even without significant price increases in the second half. Financial and domestic demand sectors are expected to join the rally in Q4 as nominal GDP growth accelerates.
