JPMorgan Chase & Co. has raised its targets for South Korean stocks for the second time in less than a month, citing improvement in the semiconductor cycle, corporate governance reforms and industrial-sector growth. According to reports from Bloomberg, the Wall Street bank lifted its base target for the Kospi to 9,000 and its bull-case target to 10,000, implying a 33% upside from Friday's close. This compares with base and bull targets of 7,000 and 8,500 set in late April. In its Korea equity strategy report released on May 11, JPMorgan noted that AI-driven demand continues to outpace memory semiconductor supply, with inventories remaining tight and high-bandwidth memory supplies tied up in multi-quarter contracts.
Memory-chip stocks account for 50% of the weight in the Korean equity benchmark and have driven about 70% of the gains this year. According to JPMorgan strategists including Mixo Das, the next two years may mark a sustained upcycle for memory chips, driven by average selling prices and volumes. The bank explained that the imbalance between memory semiconductor supply and demand is likely to widen even further next year, with customers placing orders for 2027 demand in advance. In the KOSPI market, SK hynix reached a new record high of 1,874,000 won, up 11.15% from the previous session, having surpassed the 1.9 million won mark during the session. Samsung Electronics also traded at a record high, up 5.77% at 283,750 won.
LS Securities warned that SK hynix may face expanding bonus demands as memory prices surge, while JPMorgan views Samsung's strike risk as a buying opportunity with 35 trillion won at stake. According to LS Securities, the recent rise in SK hynix shares cannot be explained by upward earnings revisions alone, with the concentration of foreign and institutional buying on the stock as a representative AI memory play having significant impact. Jung Woo-sung from LS Securities noted that expectations are growing that rising conventional D-RAM prices could push up the average selling price of high-bandwidth memory, with room for further upward revisions to HBM revenue estimates for 2027. However, he cautioned that higher memory prices could highlight labor cost and bonus issues, with demands for additional bonuses potentially expanding within SK hynix if competitors pay at higher ratios of operating profit.
JPMorgan analyst Jay Kwon projected that if Samsung Electronics accepts a significant portion of the union's demands, this year's expected operating profit could decline by 7 to 12 percent. The Samsung Electronics union has warned of a possible general strike from the 21st of this month through the 7th of next month. JPMorgan estimated that if a strike is actually carried out, it could affect 1 to 2 percent of semiconductor division revenue, with lost revenue opportunities alone potentially exceeding 4 trillion won. Despite these risks, JPMorgan maintained its 'Overweight' investment rating and target price of 350,000 won, viewing the memory industry's upward cycle as lasting longer than expected. Kwon noted that since Samsung Electronics management is showing willingness to reach an amicable agreement, this could serve as a catalyst for resolving uncertainties.
The Kospi has emerged as one of the world's top performing markets, with the index surging as much as 5.1% on Monday to an intraday record of 7,876.60. As reported by Bloomberg, this extends its year-to-date rally to around 86%. On May 11, the KOSPI opened at 7,775.31, up 3.70% from the previous trading day, and continued climbing to 7,874.87 as of 9:50 a.m. The rally is being driven by earnings growth fueled by the global AI boom, with strategists racing to upgrade their outlook on Korean equities. The strong rally in tech stocks on the New York Stock Exchange last Friday also influenced the Korean market, with the S&P 500 and NASDAQ reaching new all-time highs.
