Brokerages are scrambling to identify support levels for the KOSPI after the benchmark index fell for seven straight sessions to around 5,550, a level last seen six months ago. Market analysts broadly agree that share prices are approaching historic lows when measured against expected earnings, and describe the market as working through a W-shaped bottoming process. Still, they point to technical support around 5,300 and urge a cautious approach that leaves room for a drop to 5,000 in the worst case.
The KOSPI closed at 5,554.22 on the 15th, down 7.57%, falling below the low it recorded in late July, according to the Korea Exchange on the 16th. Circuit breakers halting trading were triggered in both markets during the session. It was the first time the KOSPI had fallen for seven consecutive sessions since September 2024. The index declined only about 6% during that earlier stretch, while in the current downturn an index that had topped 7,000 has lost more than 20%, dealing a heavy blow to investors.
Analysts are pointing to 5,300 as the most likely first line of support, citing bottoming patterns from past crises. Hana Securities highlighted the W-shaped double bottom the KOSPI formed during the 2008 global financial crisis and the 2020 COVID-19 pandemic. Lee Jae-man, head of the global investment analysis office at Hana Securities, noted that in past crises the KOSPI's second trough averaged 1.2% above the first. Applying that to the first trough of 5,262.8 on July 29 puts the second trough under a W-shaped pattern at around 5,360.
Daishin Securities also expects further declines below 5,300 to be limited. The firm noted that the index has fallen 40.4% from its June 19 peak of 9,385 points, approaching the 43.7% median decline seen in seven major crisis episodes in the past. Lee Kyoung-min, an analyst at Daishin Securities, said downside rigidity should emerge around 5,200, which corresponds to a forward price-to-book ratio (PBR) of 1, and that the range between the July 29 intraday low of 5,262 and the July 30 close of 5,593 would serve as a first line of support.
Others, however, see the KOSPI sliding to 5,000 if corporate earnings continue to weaken and macroeconomic shocks persist. Samsung Securities flagged oil price volatility and bottlenecks in AI funding, pointing to 5,000 as a psychological last line of defense. The firm's research center said 5,000 could act as support unless downward earnings revisions begin in earnest, assessing that the forward price-to-earnings ratio (PER) at that level would be 4.1 and the PBR 1.1 — an extreme undervaluation zone below the levels seen during the volatile markets of March and July.
Even so, analysts are not forecasting a sharp rebound once a W-shaped bottom forms. Retail sentiment has frozen amid the slide that began in July, and pension funds have limited room to deploy capital. Analysts agreed that even in an extremely oversold market, risk management should come before expectations of an immediate steep rebound. Their advice is to refrain from hasty additional buying until the U.S. Federal Open Market Committee meeting and Big Tech earnings in late October, and to respond by phasing into stocks with improved dividend appeal or by holding cash.
