A display board at Hana Bank's dealing room in Jung-gu, Seoul, shows the Kospi, the won-dollar exchange rate, and share prices of Samsung Electronics and SK Hynix on Monday, when the Kospi opened lower and fell to the 6,500 range in early trading. [Yonhap]
A display board at Hana Bank's dealing room in Jung-gu, Seoul, shows the Kospi, the won-dollar exchange rate, and share prices of Samsung Electronics and SK Hynix on Monday, when the Kospi opened lower and fell to the 6,500 range in early trading. [Yonhap]

Global investment banks have offered diverging views on the Korean stock market following its recent sharp decline. JPMorgan maintained its overweight rating on Korean equities, while Citigroup downgraded its stance to neutral for the first time in a year.

In a report titled "Korea Equity Deleveraging Process Update" released Tuesday, JPMorgan kept its overweight rating and maintained its 12-month Kospi target of 12,500.

Citing robust investment in AI and data centers, the bank said roughly 90 percent of foreign net selling in Korean shares this year had been concentrated in memory chip stocks. It added that selling pressure from foreign investors was gradually easing as the weighting of memory chip names declined.

On the Kospi's roughly 28 percent decline over the past month, JPMorgan said corporate fundamentals in the Korean market remained solid but that aggressive deleveraging had dragged share prices lower.

JPMorgan added that a correction initially driven by conventional fundamental concerns and sector rotation had been amplified through leveraged ETFs, with hedge fund position unwinding becoming increasingly pronounced in recent sessions.

Meanwhile, Citigroup downgraded its rating on Korean equities from overweight to neutral in an emerging-market asset allocation report published Sunday. Citi had maintained an overweight stance on Korean stocks since July last year.

Citigroup said corporate fundamentals in the Korean market remained sound but that recent share price gains had increased valuation pressure and volatility, prompting a tactical downgrade to neutral. However, it said the long-term investment case for Korean equities remained intact and that earnings momentum among AI-related companies continued to improve.


yeongdai@heraldcorp.com