Morgan Stanley, 'Overweight' After KOSPI Plunges 30%...Sets Target at 9,000

▲ KOSPI, bear market/AI-generated image

After the KOSPI plunged more than 30% from its June high, Morgan Stanley turned to an 'overweight' rating on Korean stocks, setting a target of 9,000.

According to crypto-specialized media BeInCrypto on August 3 (local time), Morgan Stanley upgraded its investment opinion on Korean stocks from 'neutral' to 'overweight'. It predicted that the KOSPI could rise by 36% to its target of 9,000. Morgan Stanley assessed the recent sharp decline as a technical correction triggered by leverage liquidation rather than corporate earnings.

Morgan Stanley strategist Daniel K Blake stated, "Leveraged ETFs, hedge fund borrowing, and individual investor margin call liquidations have passed the midpoint." The analysis suggested that the spread of single-stock leveraged ETFs and the high index weighting of some large-cap stocks amplified the decline. The short-term expected range for the KOSPI was presented as 5,500 to 10,500.

Samsung Electronics and SK Hynix were identified as key stocks to support the KOSPI's valuation. Industrial, defense, and financial sectors were also expected to contribute to the index's rise. Morgan Stanley also upgraded Thai stocks to 'overweight' based on AI facility investments, energy security, and lower stock price levels. Australian stocks were downgraded to 'underweight' due to limited upside potential after interest rate hikes and real estate tax reforms.

After falling more than 30% from its June high, the KOSPI sharply rebounded by 18% last Friday but fell again on Monday. On August 3, the KOSPI recorded 6,304.80, down 290.65 points from the previous trading day's closing price of 6,595.45. The decline rate was 4.41%. Samsung Electronics fell 7.43% to 243,000 won, and SK Hynix dropped 7.51% to 1,589,000 won.

The weakness in the Korean stock market also spread to the Japanese market. The Nikkei 225 index fell 2.09% to 63,018.33. Semiconductor equipment manufacturers Advantest and Tokyo Electron fell by 2.86% and 2.34%, respectively. Morgan Stanley suggested the possibility of a rebound in the Korean stock market, centering on Samsung Electronics and SK Hynix, based on its assessment that leverage liquidation has largely run its course.

[Article Summary]

-Morgan Stanley upgraded its investment opinion on Korean stocks to 'overweight' after the KOSPI fell more than 30% from its June high.

-The KOSPI target was set at 9,000, with a projected 36% upside from current levels.

-It analyzed that Samsung Electronics and SK Hynix would support the index's valuation, and industrial, defense, and financial sectors would back the rebound.

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