KB Securities projects a marked recovery in South Korea's equity market, forecasting that the KOSPI could reach 7,500 points by the end of 2026 as semiconductor earnings strengthen and foreign investors return. The brokerage's outlook centers on a sharp expansion in operating profits that it expects will lift valuations across Korean equities.
In its forecast, KB Securities estimates KOSPI operating profit will hit 792 trillion won in 2026 - a 165% increase from the prior year. The brokerage further projects operating profit to climb to 1.04 trillion won in 2027, which it notes would push the aggregate past the 1 trillion won mark for the first time.
Much of the anticipated uplift is attributed to earnings from Samsung Electronics and SK hynix. KB Securities expects the earnings improvement to spill beyond memory chips into a wider set of industries. The brokerage highlights expected profit growth in defense, shipbuilding, machinery, oil refineries, energy, and robotics as areas where earnings should broaden.
KB Securities' analyst Jeff Kim frames a structural shift in the memory semiconductor industry as a principal catalyst. Kim argues the sector may evolve toward a foundry-like model - where orders precede production - resembling the business structure of leading contract chipmakers. He contends this transition should be a key driver in the re-rating of Korean memory semiconductor companies.
The brokerage's company-level projections show substantial gains for major names. By 2027, KB Securities expects Samsung Electronics to top global operating profit rankings at 488 trillion won, narrowly ahead of Nvidia at 485 trillion won, with SK hynix projected at 358 trillion won.
KB Securities also highlights potential macro-financial effects tied to stronger corporate results. It projects combined corporate tax revenues from Samsung Electronics and SK hynix could rise twelvefold to 141 trillion won in 2026. The brokerage suggests that a surge in these tax receipts may lower the need for government bond issuance and could provoke a positive response in the bond market. The two companies' combined net profit for 2026 is estimated at $316.8 billion, which KB notes is roughly equivalent to 75% of Korea's foreign exchange reserves.
Investment flows related to semiconductor expansion are another element in the forecast. KB Securities points to upcoming investments in Pyeongtaek and the Yongin cluster as sources of substantial dollar inflows, which it expects would help stabilize the won versus the dollar.
The brokerage acknowledges recent foreign investor behavior, noting a net sale of 66 trillion won in Korean equities and bonds between February and March, attributed to profit-taking and geopolitical concerns. Kim expects that trend to reverse as earnings recover and the re-rating narrative unfolds.
On valuation metrics, KB Securities highlights that KOSPI is trading at a 12-month forward price-to-book ratio of 1.4x. The brokerage contrasts that with a global average of 3.1x and an Asia emerging markets average of 2.0x, arguing that Korea looks inexpensive relative to peers. It points to markets with comparable return-on-equity levels - citing the U.S. at 4.5x and Taiwan at 3.9x - to underscore the relative valuation gap.
Kim concludes that investor interest in the KOSPI should increase as earnings momentum and valuation gaps draw attention. He flags Samsung Electronics, SK hynix, and Hyundai Motor as the names most likely to attract investor focus under this scenario.
Clear summary
KB Securities expects a significant earnings-driven re-rating of Korean equities, led by semiconductor profit recovery from Samsung Electronics and SK hynix. The brokerage forecasts KOSPI operating profit rising to 792 trillion won in 2026 and to 1.04 trillion won in 2027, with potential knock-on effects for foreign investment flows, bond issuance, and currency stability.
Key points
- Korean operating profit is forecast to rise to 792 trillion won in 2026 and to 1.04 trillion won in 2027, driven largely by Samsung Electronics and SK hynix.
- Earnings expansion is expected to broaden beyond semiconductors into defense, shipbuilding, machinery, oil refineries, energy, and robotics.
- KOSPI trades at a 12-month forward price-to-book of 1.4x, a sizable discount to global and regional averages, which KB views as an attractor for investors.
Risks and uncertainties
- Foreign investor flows - Recent net selling of 66 trillion won between February and March underscores vulnerability to profit-taking and geopolitical concerns; continued outflows would pressure equities and bonds.
- Execution risk on semiconductor strategy - The presumed shift toward a foundry-like model in memory chips is presented as a catalyst, but the timing and industry adoption are uncertain and could affect earnings outcomes.
- Macroeconomic balance - While higher corporate tax revenues could reduce government bond issuance, the size and timing of such fiscal effects are contingent on realized profits and policy responses.