An employee works at the Hana Bank dealing room in Jung-gu, Seoul, on Monday, as the Kospi opened more than 3% lower after posting a record-breaking surge the previous session. [Yonhap]
An employee works at the Hana Bank dealing room in Jung-gu, Seoul, on Monday, as the Kospi opened more than 3% lower after posting a record-breaking surge the previous session. [Yonhap]

The Kospi tumbled about 5% Monday, pulling back a day after recording its largest-ever single-session gain, even as global investment bank Morgan Stanley upgraded its rating on Korean stocks to "Overweight."

According to Bloomberg and other foreign media, Morgan Stanley said in a report that the Kospi holds 36% upside potential to its 9,000-point target, following a sharp unwinding of market crowding and leverage.

The bank said the recent deleveraging had reduced valuation pressure on the Korean market, offering investors an optimal entry point into AI trading and semiconductor supercycle theme stocks.

Morgan Stanley had previously maintained an "Equalweight" rating on Korean shares.

The Kospi surged 18% on Friday before tumbling as much as 5.5% during trading Monday.

Morgan Stanley said in the report that the recent selling was driven by technical, supply-and-demand factors rather than any deterioration in fundamentals. The bank added that more than half of the leverage unwinding — including leveraged ETF positions, hedge fund margin borrowing and retail investor margin financing balances — had already been completed.


yckim6452@heraldcorp.com