JPMorgan has raised all of its 12-month targets for South Korea’s KOSPI, setting a base case of 12,500, a bull case of 15,000, and a bear case of 8,000. Using the roughly 8,471 level cited in the report coverage, the 15,000 target implies about 77% upside. That makes JPMorgan more bullish than KB Securities and Goldman Sachs, both of which had projected 12,000.
Korea remains JPMorgan’s top market in Asia
In its Korea equity strategy report released on Thursday, the bank kept South Korea as its highest-conviction market in Asia and advised investors to add on dips while maintaining maximum exposure to Korean equities. According to coverage by The Korea Herald Business, strategist Mixo Das tied that view to the country’s close connection with the AI cycle, especially in memory chips.
JPMorgan said it remains positive on a “longer and stronger” memory chip cycle. The bank argued that investment in AI data centers is lifting profit growth across hardware companies, and that the profit pool for technology firms involved in AI data center buildouts has grown to a scale with macroeconomic significance. In the report, its strategists wrote that they still hold a constructive view on AI and see continued earnings improvement among related hardware companies.
Leveraged ETFs and derivatives are amplifying swings
Even as it lifted index targets, JPMorgan warned that volatility in the Korean market could stay elevated. The report said leveraged ETFs tied to Korean assets have grown to $50 billion in assets under management, adding force to market moves. The expansion of futures and options strategies alongside cash equity positions has also enlarged the domestic derivatives market, while demand for inverse ETFs has pushed implied volatility higher.
On foreign selling pressure, JPMorgan described Korea as becoming “a victim of its own success.” As the market values of memory leaders such as Samsung Electronics and SK Hynix climbed, they began to approach position limits for emerging-market investors. That creates a structural pattern in which rallies can trigger passive trimming, putting pressure on the stocks as they rise.
Other themes go beyond AI hardware
Outside AI hardware and memory, JPMorgan highlighted several additional themes in Korea. These included banks, backed by interest-rate conditions that support net interest margins; biotech and pharmaceutical names with drug pipelines moving into clinical validation; preferred shares, which the bank said retain appeal because of dividend yield; and sectors linked to a wealth effect, including department stores, cosmetics, travel, brokerages, and construction.
The bank added that foreign selling and high volatility may persist in the near term, but global investor positioning in Korea remains low, leaving room for allocations to increase.