Securities Firms Adjusting KOSPI Outlook Upwards for the Second Half… Reflecting Expectations of Shareholder Return and Interest Rate Cuts

As the domestic stock market continues its upward trend, major securities firms are sequentially adjusting their KOSPI forecasts for the second half of the year.

Amid the stimulus of shareholder return policies and expectations of interest rate cuts following the new government's establishment, some securities firms have suggested that the KOSPI index could rise to 4000.

According to FnGuide on the 29th, major securities firms that released forecasts for the domestic stock market in the second half predict that the KOSPI will fluctuate in the range of 2533 to 3224 on average.

Hana Securities provided the highest KOSPI forecast at an impressive 4000.

Lee Kyung-soo, an analyst at Hana Securities, explained, "The expectations for shareholder return from the new government, the North Korea-friendly policies, the resolution of political uncertainties, and the strengthening of the won are currently alleviating the worst discount of the Korean stock market compared to the global market."

He further projected, "There is a possibility that the KOSPI could recover to 4000, which corresponds to a price-to-earnings ratio (PER) of 12.6 times."

Securities Firms Sequentially Adjust KOSPI Band Upwards Following Surge After the Presidential Election

Following a considerable surge in the KOSPI after the presidential election, securities firms are belatedly adjusting their KOSPI bands upwards.

The expectations for capital market reforms and improvements in corporate governance stemming from the new government have led to increases in projected values for price-to-book ratios (PBR) and PER.

KB Securities initially projected the KOSPI band to be between 2600 and 3240 on the 11th, but adjusted the upper limit to 3700 just two weeks later on the 25th. This adjustment represents the highest level among firms that provided both upper and lower bands.

Lee Eun-taek, an analyst at KB Securities, stated, "The key factors behind this bullish market are the government's push for capital market reforms and the weakness of the dollar," adding, "After passing through the tariff threats from the U.S. in the second half, the stock market will resume its rally due to interest rate cuts by the Federal Reserve."

Yuanta Securities also significantly raised its KOSPI band from the previous range of 2450 to 2900 to 2800 to 3300.

Kim Yong-gu, an analyst at Yuanta Securities, commented, "Since the establishment of the new government under Lee Jae-myung, the increase in foreign buying and the rapid pace of index expectations have transformed the target multiples dramatically."

Risks and Investment Strategies for the Second Half

However, securities firms raised concerns about temporary stock market downturn factors, such as U.S. tariffs and potential delays in Federal Reserve interest rate cuts for the second half.

Lee Eun-taek from KB Securities predicted, "There is a high likelihood that the timing for the reinstatement of U.S. tariffs will be confirmed around August."

Ahn Gi-tae, an analyst at NH Investment & Securities, forecasted, "As the increase in tariffs gets passed on to consumer goods prices, the U.S. CPI inflation rate may approach 3.0% in the second half of 2025."

Concerns were also expressed about a slowdown in domestic corporate earnings.

Jeong Da-woon, an analyst at LS Securities, pointed out, "The U.S. inventory and CAPEX are in a poor state, and the lending attitudes of banks, which move ahead of these trends, are also sluggish," indicating, "It is difficult to be optimistic about the earnings growth of domestic listed companies, which are export-oriented."

In this situation, experts recommend investing in financial stocks where shareholder returns are anticipated or in nuclear power and semiconductor-related stocks that are expected to benefit from government policies.

Kim Jong-young, an analyst at NH Investment & Securities, projected, "While the shipbuilding and defense industries led in the first half, in the second half, Korean AI growth stocks and governance value stocks such as Samsung Electronics, SK Hynix, KT, and LG CNS will be promising."

Amid the recent resumption of short selling, advice was also given to invest in stocks that are seeing a surge in short covering.

Lee Kyung-soo from Hana Securities forecasted, "Stocks that have seen a concentration of short-selling, such as Hanwha Vision, Hanmi Semiconductor, Hotel Shilla, and POSCO Future M, are expected to rise additionally as earnings turn around."

Image sources: Materials photos for better understanding of the article / News1, materials photos for better understanding of the article / gettyimagesbank, AI-generated image for better understanding of the article / chatgpt