[Image generated with ChatGPT]
[Image generated with ChatGPT]

Hanwha Investment & Securities has forecast the Kospi could climb as high as 9,300 next year, even as the index continues to swing up and down.

In its 2027 annual outlook released Thursday, Hanwha Investment set a Kospi target of 8,500 for next year, with an expected range of 6,000 to 9,300. The index has been on a downward trend since hitting an all-time closing high of 9,114.55 on June 22.

The brokerage set quarterly Kospi targets of around 7,600 for the fourth quarter of this year, around 7,700 for the first quarter of next year and around 7,550 for the second quarter. It projected the index at around 7,900 in the third quarter of next year and around 8,500 in the fourth.

Ha Jeong-kwon, a researcher at Hanwha Investment, said the return on equity currently priced into the market stands at roughly 11 percent — well below the 16 percent ROE based on trailing 12-month earnings and the 26 percent forward ROE. "Since 2005, whenever the market-implied ROE has fallen below the actual earnings-based ROE, the Kospi has delivered an average return of 28 percent over the following year," he said.

Ha recommended buying on dips below the 6,000 level, and said concerns over China's CXMT are mere noise. He added that most of the index's gains would be concentrated in the fourth quarter of this year and the first quarter of next year, when year-end long-term supply agreements and HBM price negotiations for next year are expected to trigger a memory chip rerating.

Ha also said South Korea's 12-month forward ROE on an MSCI basis exceeds Taiwan's, but that the market lacks confidence in the sustainability of Korean corporate earnings growth. He said year-end long-term supply agreements and next year's HBM price negotiations would help reduce earnings volatility and build that confidence.

By sector, he said semiconductors and IT hardware deserve attention through the first quarter of next year, while banks, steel, transportation and utilities stand to benefit from the second quarter onward as interest rate pressures ease and the won strengthens.


klee@heraldcorp.com