Semiconductor surge, global liquidity, and AI revolution fuel bullish forecasts for Korean stock market
Major domestic securities firms have stated that the KOSPI index is expected to reach the uncharted territory of 5,000 points in the new year. The analysis suggests that as the performance of domestic listed companies, particularly in semiconductors, significantly improves, the Korean stock market will be re-evaluated and rapidly emerge as an attractive market drawing global investors. The increasing global liquidity is also expected to serve as a positive factor supporting the rise of the stock market.
Experts have identified artificial intelligence (AI) as the most notable theme in the new year’s stock market. The analysis suggests that the ‘AI revolution,’ which is changing the paradigm of the global IT industry, will spread across all sectors, including semiconductors, power infrastructure, as well as physical fields such as robotics, automobiles, and aerospace.
According to a compilation by Chosun Biz of major securities firms’ 2026 stock market forecasts, many securities companies predicted a breakthrough of the KOSPI 5,000-point mark. Notably, KB Securities stated, “The KOSPI has entered a new bull market for the first time in 40 years since 1985,” and presented a bold forecast that the index could surge to 7,500 points under a long-term upward scenario. NH Investment & Securities also forecasted that the KOSPI could rise to the 5,500-point level.
◇ Liquidity, Performance, and Valuation: Three Factors Align for Bullish Market Expectations
Experts anticipate that the domestic stock market in the new year will show strength as the three factors of liquidity, performance, and valuation align.
First, global liquidity is in an expansion phase. While central banks around the world maintain accommodative monetary policies to stimulate sluggish economies, governments are also implementing expansionary fiscal policies. With abundant funds flowing into the stock market, the market is expected to continue its strong performance this year.
Expectations for improved performance of listed companies are also high. According to Mirae Asset Securities, driven by the strong performance of Samsung Electronics and SK Hynix, the semiconductor sector’s operating profit is expected to significantly increase by over 80%, from 82 trillion Korean won in 2025 to 148 trillion Korean won in 2026.
Kim Dong-won, head of KB Securities’ Research Center, said, “Considering the growth inflection points of the global IT industry over the past 40 years, AI is judged to be the third industrial revolution following PCs (the internet) and mobile (iPhones). The PC and mobile industries sustained long-term high growth for 10 to 15 years after their inception. However, the AI industry is only three years old since the public release of GPT in November 2022, and given that the AI expansion cycle is just beginning, the debate comparing the AI industry to the dot-com bubble is considered an unrealistic perspective.”
The operating profit of listed companies excluding semiconductors is also expected to increase by 22%, from 205 trillion Korean won to 249 trillion Korean won. The strong performance of the KOSPI in the second half of 2025, which set a new record high, was ultimately due to clear improvements in the performance of listed companies. It is expected that in the new year, the profit growth rate and momentum of domestic companies will significantly exceed the averages of major countries.
With abundant market funds and improvements in the performance of listed companies, the key to achieving the monumental goal of the KOSPI breaking through the 5,000-point mark is a re-rating of valuations. Even for the same company, stock prices can vary depending on how investors evaluate them. The recent change in investors’ perception of Korean stocks could positively influence this.
Behind this change lies the government’s policy to revitalize the stock market. Institutional improvements such as separate taxation of dividend income, amendments to the Commercial Act, and tax support for long-term investments are being promoted, leading to expectations of a re-rating of the price-to-book ratio (PBR) of the Korean stock market. Kim Jong-min, a senior researcher at Samsung Securities, said, “Through policy support, the Korean stock market is entering a phase where it is structurally re-evaluated.”
Samsung Securities recommended Samsung Electronics, SK Hynix, Samsung Electro-Mechanics, Doosan, Isu Petasys, Korea Electric Power, HD Hyundai Electric, Hyundai Motor, LG Electronics, and Robotis as AI-related stocks, and also suggested Samsung Epis Holdings, ABL Bio, OliX, HD Hyundai Heavy Industries, HYBE, and APR as stocks with high growth potential.
There is also analysis suggesting that the KOSDAQ market, which is relatively more undervalued, has high investment appeal. Cho Soo-hong, head of the research center at NH Investment & Securities, said, “Although KOSDAQ was somewhat sluggish last year, this year’s funding environment is expected to improve due to productive financial policies and inflows from the National Growth Fund.” He added, “Investment appeal is expected to increase, particularly in the bio and venture sectors.” NH Investment & Securities forecasted that the KOSDAQ index could rise to 1,100 points in the new year.
◇ “Portfolio Adjustment Toward Domestic Demand and Dividend Stocks Needed in the Second Half”
However, as the year progresses into the second half, risk factors may gradually emerge. The U.S. Federal Reserve’s interest rate cut cycle is expected to conclude, and the U.S. midterm elections at the end of the year, along with the expiration of the U.S.-China tariff deferral, could overlap, potentially expanding market volatility as the year-end approaches. If concerns about inflation resurface, the burden on corporate profitability could also increase.
Yoo Myung-gan, a researcher at Mirae Asset Securities, diagnosed, “As the index level has risen, phases where stock market volatility could increase due to macroeconomic variables such as renewed U.S.-China tensions, AI bubble debates, entrenched inflation, and continued weakness of the Korean won may become frequent.”
The ‘weakness of the Korean won’ (rise in the won-dollar exchange rate), which has emerged as a key variable for the domestic economy and stock market, is likely to continue as a trend for the time being. Experts believe that the 1,400 won per dollar exchange rate will become the ‘new normal.’ While the weak won can increase profits for export companies, it also acts as a ‘double-edged sword’ that could burden foreign capital inflows into the domestic stock market.
Lee Kyung-min, a researcher at Daishin Securities, advised, “When the KOSPI index experiences a correction below 3,800 points, a strategy of actively increasing exposure with the KOSPI 5,000 era in mind is necessary.” However, he added, “In the second half of the year, adjusting the portfolio by reducing the proportion of growth stocks and increasing domestic demand stocks and dividend stocks while focusing on monetary policy is a strategy to secure stability.”
