Can the Kospi surpass 5,000 this year? Market strategists split.

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Can the Kospi surpass 5,000 this year? Market strategists split.

Published: 02 Jan. 2026, 17:16 Updated: 02 Jan. 2026, 19:17

Audio report: written by reporters, read by AI

Lights shine at the Yeouido financial district in Yeongdeungpo District, western Seoul, on Dec. 28, 2025. [NEWS1]

Korea’s benchmark Kospi crossed 4,000 for the first time in 2025, lifted by semiconductor stocks and other large-cap technology shares. Investors now want to know if it can break through 5,000 this year, amid AI bubble concerns and the risk of foreign outflows driven by currency swings.

That question has split market strategists. Research chiefs at five major securities firms — Mirae Asset Securities, Hana Securities, Korea Investment & Securities, KB Securities and NH Investment & Securities — expect the index to range anywhere from as low as 3,750 to as high as 5,500 this year. Excluding Mirae Asset, which did not present a specific target, the group is divided on whether the long-discussed 5,000 level is within reach.

Expectations for a bullish Kospi has mounted entering 2026, as the main bourse broke past the 4,300 level on Jan. 2, the first trading day of the year. It closed at 4,309.63 on Friday, up 2.27 percent from the previous trading on Dec. 30 of last year.

Bulls see policy support and chip earnings

NH Investment & Securities offered the most optimistic forecast, projecting a range of 4,000 to 5,500. Cho Soo-hong, head of research, said the index could reach the upper end of that range as early as the third quarter.

“Growth led by semiconductors is continuing, and a market re-rating driven by policies aimed at normalizing the capital market should also persist,” Cho said.

He pointed to sharply rising earnings expectations for Samsung Electronics and SK hynix, the two largest companies on the Kospi by market capitalization.

“Combined operating profit forecasts for the two companies have been revised up from about 160 trillion won [$110.8 billion] to more than 200 trillion won this year,” he said.

A monitor at the Korea Exchange in Yeouido, western Seoul, shows Samsung Electronics' stock price as the Kospi surpassed the 4,300 mark to reach an all-time high on Jan. 2. [NEWS1]

KB Securities also said the Kospi could test the 5,000 level. Kim Dong-won, its head of research, framed the outlook around the durability of AI demand.

“The growth cycle of the AI industry that underpins demand for Korean semiconductors could last as long as 10 years,” Kim said. “There will be fluctuations, but the base level of AI growth itself is rising.”

He added that earnings from the so-called Magnificent Seven — Microsoft, Meta, Amazon, Alphabet, Apple, Nvidia and Tesla — continue to outperform the broader S&P 500, reinforcing confidence in technology-led markets.

Kim Hak-kyun, head of research at ShinYoung Securities, struck a similar tone in a report published on Tuesday, written in the form of a self-critique titled “My mistakes in 2025" (translated).

“I could not even imagine the Kospi reaching 4,000 amid the strange combination of a weak won and rising stock prices,” Kim wrote. “Now, reaching 5,000 or even 6,000 no longer seems impossible.”

Kim argued that if the United States turns to exchange rates rather than tariffs to address external imbalances, the dollar’s strength could give way to a more structural decline.

“If the won strengthens [as the dollar weakens], Korean stocks could gain appeal as non-dollar assets,” he said.

Caution focuses on the second half

The screens show the Kospi left, the foreign exchange rate between the dollar and won and the Kosdaq at a dealing room of Hana Bank in Seoul on Dec. 30, 2025. [AP/YONHAP]

More conservative forecasts came from Hana Securities, which projected a range of 3,750 to 4,650, and Korea Investment & Securities, which put its upper bound at 4,600. Both firms expect gains to be front-loaded, with conditions becoming more challenging in the second half of the year.

They cited the risk of prolonged weakness in the won and tighter monetary conditions, which could weigh on foreign investor demand.

Yoo Jong-woo, head of research at Korea Investment & Securities, said the exchange rate would be the decisive factor if the index fails to reach 5,000.

“If the Kospi does not reach 5,000, the main reason will be the currency,” Yoo said. “In the second half, a weaker won would limit monetary easing and worsen the supply-and-demand environment.”

Hwang Seung-taek, head of research at Hana Securities, warned that inflation pressures could erode expectations for interest rate cuts.

“If inflation pressures intensify after the third quarter, expectations for rate cuts will weaken,” Hwang said. “Once global liquidity peaks, the Kospi could turn lower.”

AI bubble fears add volatility

A screen reads 'AI' in reference to artificial intelligence as attendees gather during Rivian's first Autonomy and AI Day, showcasing developments in self-driving technology, in Palo Alto, California, on Dec. 11, 2025. [REUTERS/YONHAP]

Concerns over the profitability of AI investments — often framed as fears of a bubble — also loom as a key variable.

Park Hee-chan, head of research at Mirae Asset Securities, said expectations for semiconductor earnings should remain strong in the near term but warned that the market is highly sensitive to any disappointment.

“Even a small crack in the optimistic narrative around semiconductor profits could shake the entire market,” Park said.

He added that Korean chipmakers are not immune to AI bubble concerns, noting that about 40 percent of last year’s increase in aggregate Kospi operating profits came from Samsung Electronics and SK hynix.

Yoo echoed those concerns, pointing to risks tied to large-scale funding for AI investments.

“Issues related to financing large investments, including those involving Oracle, have already emerged,” he said. “If Nvidia’s earnings also fall short, volatility in semiconductor stocks could increase.”

Semiconductors still seen as market leaders

Despite the risks, analysts broadly agree that semiconductors will remain the Kospi’s leading sector this year. They cite Korea’s competitive edge in high bandwidth memory, a critical component in the AI chip supply chain.

Industries linked to power generation and nuclear energy, which support AI infrastructure, were also cited as promising. Looking further ahead, some strategists said the transition toward so-called physical AI — including autonomous vehicles and humanoid robots — could lift related stocks starting in 2026.

“It is worth paying attention to companies highlighting physical AI at CES,” Cho said.

Even so, analysts stressed the need for selectivity.

“AI is both an opportunity and a risk,” Park said. “We cannot yet conclude that there is a bubble, but investors need to be selective and avoid companies whose share prices have become detached from earnings.”

Visitors view SK hynix semiconductor products on view at the SK AI Summit 2025 held at Coex, southern Seoul, on Nov. 3, 2025. [NEWS1]

Domestic sectors lag, U.S. outlook steadier

By contrast, domestic demand-oriented sectors drew less enthusiasm. Analysts said a prolonged period of won weakness could raise import costs and squeeze margins for consumer goods and construction companies.

Cho warned that currency depreciation could deepen polarization across sectors.

“Most of the increase in Kospi earnings is concentrated in Samsung Electronics and SK hynix,” he said. “That means rising asset prices and the economic recovery people feel on the ground may not move in tandem.”

For Korean retail investors with exposure to overseas markets, analysts said U.S. equities could remain supportive through the first half of the year. Expansionary fiscal policy ahead of the November midterm elections could inject additional liquidity into markets.

Kim of KB Securities said policy shifts in Washington could amplify that trend.

“If U.S. President Donald Trump significantly eases regulations in the AI race with China and replaces the Federal Reserve chair with a close ally, the rate-cutting cycle could strengthen further,” he said.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY JANG SEO-YUN [[email protected]]