Top South Korean stocks hit all-time lows
South Korea’s remarkable stock rally has presented investors with an unexpected scenario: equities are trading at historically low valuations. The Kospi has surged approximately 80 per cent this year, reaching a succession of record highs; however, the pace of analyst earnings upgrades has outstripped this growth. Rising profits at memory-chip leaders Samsung Electronics and SK Hynix have propelled the benchmark to a mere 6.4 times forward earnings, a figure that falls below the valuations observed during the 2008 global financial crisis. The recent sharp selloff, driven by renewed scepticism regarding the artificial-intelligence trade, has further compressed valuations.
For investors, the inquiry revolves around whether unprecedented low valuations indicate a potential opportunity, or if they represent a market anticipating the eventual conclusion of the memory boom. “Good buy or not really depends on individuals’ portfolios: If one is not exposed much to these names, it is a great time to get in to provide the growth component for the portfolio tied into the AI theme,” said Francis Tan. “Earnings are robust and still forecast to be strong.” Unlike most bull markets, Korea’s rally has been driven less by investors accepting higher multiples and more by corporate earnings exceeding expectations significantly.
Consensus estimates for Kospi companies have experienced an uninterrupted ascent for 17 consecutive months — marking the most extended period of upgrades in over nine years — driven by surging memory-chip prices as international technology firms compete to establish AI infrastructure. While the index has outperformed global peers, it continues to trade at a significant discount compared to other chip-heavy benchmarks. The Kospi’s price-to-earnings ratio stands at one-third of the current multiple for Taiwan’s Taiex.
