Morgan Stanley: The plunge in Korean stocks is only a short-term correction, maintaining a target price of 9,000 points

Jinse Finance reported that on June 24, Morgan Stanley assessed that the sharp decline of the Korea Composite Stock Price Index (KOSPI) on Tuesday is merely a phase correction and will not evolve into a persistent and significant downturn. FactSet data shows KOSPI plummeted by about 10% on the day, marking its largest single-day drop since March and the sixth largest single-day decline in the index’s history. South Korean stocks notably underperformed other major Asian markets on Tuesday, primarily due to the high weight of the memory chip sector in the index. The global semiconductor sell-off directly triggered sharp declines in heavyweight stocks. Morgan Stanley analyst Joon Seok stated in Tuesday’s client research report that the fundamentals of the memory chip sector have not substantially deteriorated, and the losses in positions caused by this round of declines are only a short-term phenomenon. “We characterize this adjustment as a consolidation during an upward movement, rather than a breakdown of the trend.” The recent correction in South Korean stocks resulted from the substantial gains accumulated in previous sessions, leading to strong profit-taking demand. According to FactSet, KOSPI has risen over 62% in the second quarter, with a year-to-date increase of nearly 95% in 2026; after a long period of one-sided gains, the market’s bullish momentum is exhausted.Joon Seok believes that South Korean stocks currently do not meet the criteria for a bear market. This drop is merely a brief period of wait-and-see by trading funds, anticipating clearer signals from Federal Reserve policy and the AI industry outlook. He predicts that in the second half of 2026, KOSPI’s overall volatility will be significantly higher than in the first half, but maintains a target price of 9,000 points, which still leaves nearly 10% upside from Tuesday’s close. At Wednesday’s opening, the KOSPI index rose 1.9%, Samsung Electronics gained 4%, and SK Hynix climbed 3%.