Global banks eye Kospi 3,200 breakout
Major foreign investment banks are turning increasingly bullish on Korea’s equity market, with projections suggesting the benchmark Kospi could climb over 3,200 points within the next 12 months, driven by government-led reforms aimed at improving corporate governance and bolstering shareholder protections.
Citigroup raised its 2025 Kospi target to 3,300, up from a previous projection of 2,900, citing President Lee Jae Myung’s push to overhaul the chaebol-dominated corporate governance system long blamed for the so-called “Korea discount.”
The Kospi has gained on nine out of the past 10 trading days this month, delivering a return of 9.36 percent. The main board climbed nearly 30 percent from its low in April.
The bank pointed to planned revisions to the Commercial Act, led by the ruling Democratic Party of Korea, as a potential catalyst for further gains in Korean equities.
“We believe the proposed revisions, if implemented, should pave the way for greater transparency in Korean corporate governance and support stronger shareholder return policies,” Citi said in a report released Wednesday.
The planned legislative changes would require conglomerates with assets exceeding 2 trillion won to adopt cumulative voting. The mechanism allows shareholders to cast all their votes for a single board candidate, enhancing the fairness of board elections and curbing concentrated control by large stakeholders.
JP Morgan also revised its 12-month Kospi target to 3,200 points and upgraded Korea to overweight. The bank cited the country’s improving political stability and the potential for structural reforms to unlock long-suppressed value.
Foreign ownership of Korean equities remains around 30 percent, near levels last seen during the global financial crisis, according to JP Morgan. The firm sees corporate governance legislation and progress in US-Korea trade negotiations as potential triggers for a re-rating of Korean assets.
Sectors poised to benefit from the reform agenda include memory chip, finance, defense, holding companies, chemicals and consumer goods, according to the bank.
The broader mood in the market is also being shaped by a resurgence in foreign investor inflows. Korean exchanges reported net foreign purchases exceeding 2 trillion won ($ 1.46 billion) in May, reflecting renewed confidence following the restoration of political stability.
Foreign investors poured about 1 trillion won into the market on each of three consecutive trading days in early June, coinciding with the Kospi’s brief rally past 2,900 after the new government took office.
Onshore, investor sentiment remains strong. Domestic cash holdings reached a record high of around 62 trillion won as of June 2025, offering further support for inflows into equities.
Some analysts, however, caution that the recent rally’s rapid pace could prompt near-term corrections amid geopolitical tensions and trade-related uncertainties.
Korean brokerages have also started to revise their Kospi forecasts higher. Some now see the index surpassing 3,000 points in the second half of 2025 and into early 2026, reflecting growing confidence in the government’s ability to reduce policy risk and advance shareholder-friendly initiatives.
KB Securities now sees the Kospi reaching 3,240 within the next 12 months. The brokerage points to sustained re-rating momentum, with key sectors such as finance, nuclear energy, defense and holding companies driving gains.
“While short-term volatility remains a risk, the structural narrowing of Korea’s valuation gap suggests room for further upside in leading names,” said Kim Dong-won of KB Securities.
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