Shares of Samsung Electronics (005930) and SK hynix (000660) could rebound in November and December after the KOSPI confirmed a bottom, according to a securities research report.
"The KOSPI appears to have confirmed a W-shaped bottom after hitting lows twice, on July 29 and Oct. 15," Kim Dong-won, head of research at KB Securities, said in a report on the 22nd. "We believe the peak of concerns has passed."
Kim argued that share prices have fallen too far relative to earnings. Based on 2027 earnings estimates, he said the KOSPI trades at a price-to-earnings ratio of 4, Samsung Electronics at 3.3 and SK hynix at 2.7, marking an extreme undervaluation comparable to past financial crises. Kim said demand driven by artificial intelligence, which underpins chip earnings, remains solid. AI server demand is healthy, and AI chip demand is expected to outstrip supply through 2028, he said.
External headwinds that have weighed on the Korean market may also gradually ease. "The 10-year U.S. Treasury yield appears to have passed a near-term peak, so the pace of further increases is likely to moderate, and concerns over the financial health of AI data center operators have already been largely priced into share prices," he said.
One near-term variable is the U.S. midterm elections set for Nov. 3. If the Democratic Party wins control of Congress, regulation and investment oversight of AI data centers could tighten, Kim said, but given the broader U.S.-China race for AI supremacy, a sharp pullback in AI infrastructure investment itself is unlikely.
"Market attention is expected to shift from interest rates to inflation, and from fund flows to earnings," Kim said. "In November and December, a W-shaped rebound will begin as the unusual gap between earnings and valuations narrows."
According to the Korea Exchange, Samsung Electronics closed at 214,500 won on the day, down 9,000 won or 4.03% from the previous session, while SK hynix fell 71,000 won, or 5.49%, to 1,234,000 won. The KOSPI ended at 5,533.77, down 201.89 points or 3.52%.