Morgan Stanley: 36% Upside Potential for South Korean Stock Market After Restructuring
Morgan Stanley maintains its target of 9,000 points for the KOSPI, believing that after significant corrections and a cleansing of leverage, the market is nearing its bottom, with approximately 36% upside potential from the current level of around 6,300 points.
The firm noted that the KOSPI has retreated over 25% from its recent peak, and the selling pressure from leveraged ETF liquidations and position adjustments has largely been released. Previously, Goldman Sachs and JPMorgan also expressed optimism or raised their targets, with several institutions focusing on semiconductor valuations and profit recovery.
Foreign and institutional funds are reassessing buying opportunities after the clearing of leverage. Event-driven buying may return to semiconductor-weighted stocks, benefiting long-term funds with low leverage positions; high-leverage retail investors and related ETF products are exiting under pressure, with short-term pricing power shifting to fundamentally driven funds.
Source: Public Information
ABAB AI Insight
The South Korean stock market experienced a complete cycle from rapid growth to sharp correction in 2026, with semiconductor weights dominating index fluctuations, while retail leveraged products amplified the volatility. Morgan Stanley's persistence on the 9,000-point target after the pullback aligns with Goldman Sachs raising its target to a higher level and JPMorgan adjusting its base and optimistic scenarios, indicating that Wall Street's consensus on the sustainability of the AI storage cycle remains intact.
In terms of capital flow, foreign capital significantly entered during the previous uptrend, and during the correction phase, there was a position adjustment and leverage clearing, with funds shifting from high-volatility instruments to core targets with lower valuations. The motivation is to lock in dual support from semiconductor profit recovery and policy reforms (Value-Up), rather than merely chasing momentum.
Similar cases can be seen in the rebounds of certain emerging markets in 2020-2021 after leverage clearing, as well as the South Korean market attracting long-term funds multiple times at the bottom of the semiconductor cycle. The current phase is one of repricing after high volatility, rather than a trend ending.
Essentially, this is about capital concentration. The mechanism is that after leverage is forced to de-leverage, marginal buyers shift from speculative funds to institutions capable of pricing future profits, thus raising the index's central tendency.
ABAB News · Cognitive Law
- The day leverage clearing is completed is the true starting point for pricing.
- The persistence of institutional target prices often carries more information than daily fluctuations.
- After the exit of volatility-amplifying tools, fundamentals regain pricing power.