South Korean stocks have reached a new peak. Why does JPMorgan expect them to rise another 28%?

South Korea's Kospi index hit a new all-time high of 7,899.32 points during trading on Ma 11. Emerging market stocks are rising amid investor interest in the field of artificial intelligence - concerns about stalled peace talks between the U.S. and Iran - emerging market securities largely ignored Monday, Bloomberg wrote.

Against the backdrop of the global AI boom, the Kospi will rise further, analysts at JPMorgan believe - for South Korean stocks they have raised their target for the second time in less than a month and now in a bullish scenario expect the Kospi to rise another 27.8% from its closing level on May 11.

South Korea's Kospi stock index jumped 5% at one point on Ma 11, once again hitting an all-time high on Ma 11. However, then the index slowed down a bit and finally closed with a gain of 4.3% - at the level of 7822.24 points. The growth of South Korean shares was supported by active purchases of semiconductor manufacturers' securities by market participants. Since the beginning of the year, despite a decline in March amid the war in the Middle East, the index has added about 86%, becoming one of the fastest-growing markets in the world.

The index of emerging market shares was also up 1.4% on Monday. The leaders of growth were securities of chipmakers SK Hynix, Samsung Electronics and MediaTek. The indicator was close to a record close, the agency notes.

JPMorgan Chase raised the base target level for the Kospi index to 9,000 points, and in the optimistic scenario of analysts, the growth of the South Korean stock market could reach 10,000 points. The latter target suggests a potential upside of nearly 28% by the close of trading on Monday, Ma. 11. Back in late April, JPMorgan expected the Kospi to grow to 7,000 points in the baseline scenario and to 8,500 - in the positive scenario, recalls Bloomberg.

"While the Korean market may look technically overheated again in the short term, its key fundamentals remain resilient for now - the situation in the memory chip market, corporate governance reforms and growth related to AI topics," wrote JPMorgan Chase strategists led by Mikso Das. In their opinion, in the current environment, investors should still bet on further market growth and not expect a premature end of the cycle.

So far, the Kospi's gains remain narrow, Bloomberg notes: of the 835 companies in the index, only about 120 stocks rose on Monday.

In addition, the South Korean market rally has added to concerns that technology stocks have already become too expensive and vulnerable to a correction. "We think the market is a bit overheated in terms of valuations," Lorraine Tan, director of equity analysis at Morningstar Asia, said on Bloomberg Television. She said possible disruptions in chip supply due to raw material shortages amid the Middle East crisis could weigh on the sector.

This article was AI-translated and verified by a human editor