Morgan Stanley Upgrades South Korean Stock Market to Overweight, Targeting 9,000 Points

Morgan Stanley has upgraded the South Korean stock market to overweight, setting a target price of 9,000 points, implying a 36% upside potential. Morgan Stanley believes that the deleveraging process is nearing its end, and the KOSPI valuation has fallen to historical lows, providing an attractive entry point for investors. Data shows that hedge funds have completed about 75% of their deleveraging, with leveraged ETFs having evaporated 70% from their peak, significantly improving the chip structure. Shawn Kim, head of Morgan Stanley's Asia Technology team, pointed out that the three major catalysts for South Korean chip stocks include: first, capital expenditure, with the capital management moves of Samsung Electronics and SK hynix seen as important catalysts, as the market anticipates announcements from both companies regarding value enhancement plans and capital returns; second, HBM4 pricing, with Samsung Electronics stating that HBM4 will account for about 60% of its total HBM sales by the end of next year, and if prices exceed $3 per Gb, it will positively catalyze overall DRAM pricing from 2026 to 2027; third, the iPhone 18 release cycle, with mobile devices accounting for 30% to 40% of global DRAM demand and 25% to 30% of NAND demand. Apple is optimistic about the iPhone 18 cycle, expecting a year-on-year shipment increase of 5% to 10%. The iPhone 18 is set to launch in September, and if sales perform well, it will positively impact Samsung Electronics and SK hynix.

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