International funding financial institution Citi has considerably raised its KOSPI forecast from 3,700 to five,500. The evaluation means that Korea’s economic system will enter a Goldilocks part subsequent yr, characterised by neither overheating nor recession, because the robust restoration in reminiscence semiconductor situations combines with diminished Korea-U.S. commerce tariff uncertainties.
In response to the monetary funding business on Nov. 14, Citi not too long ago issued a report titled “Semiconductor-led Goldilocks Setting: KOSPI Goal Raised to five,500,” stating that “the continued reminiscence increase cycle is anticipated to constantly drive KOSPI earnings development till 2026.”
Citi significantly analyzed that “Korea’s reminiscence chip business is firstly of a structural upcycle, and this cycle may probably surpass the NAND upcycle of 2001-2007.” As background, it defined that “AI-related demand is essentially driving up DRAM and NAND demand.”
The report anticipated that the commerce settlement between Korea and the U.S. leaders on the finish of final month resolved tariff dangers for Korean manufacturing, and strengthened cooperation between the 2 international locations in manufacturing and industrial sectors would profit home firms. Concerning the third Industrial Act modification being promoted by the ruling occasion, it additionally evaluated that “given the clear intention to strengthen company governance, it is going to contribute to enhancing the valuation of the KOSPI market.”
Concerning Korea’s financial outlook, it identified that subsequent yr’s gross home product (GDP) will develop 2.2%, getting into a Goldilocks state. Goldilocks is an expression derived from the British fairy story “Goldilocks and the Three Bears,” that means an applicable temperature that’s neither too scorching nor too chilly, and in economics, it refers to a scenario the place development and worth stability are balanced.
Citi evaluated that favorable reminiscence semiconductor situations and steady power worth developments may have a optimistic influence on development. The inflation fee is anticipated to be just one.8% subsequent yr, decrease than the Financial institution of Korea’s official inflation goal (2%).
Citi introduced Samsung Electronics (005930), SK Hynix (000660), LG Vitality Answer (373220), Hyundai Motor Firm (005380), Doosan (000150), KT&G (033780), LS ELECTRIC (010120), Hyundai Glovis (086280), Cheil Worldwide (030000), and Paradise (034230) as prime picks for the home inventory market.
Citi calculated the KOSPI goal at 5,500 whereas making use of a price-to-book ratio (PBR) of 1.7 occasions. This determine is an identical to the extent throughout 2001-2007 when the NAND market skilled fast development resulting from explosive demand for MP3 gamers and digital cameras, resulting in a increase within the reminiscence business. PBR is a measure indicating how a lot a inventory worth is valued relative to web property, analyzing that this KOSPI will attain a stage just like the heyday of the previous reminiscence business increase.
