Global investment bank JPMorgan has reiterated its positive stance on South Korean equities, citing strong momentum in artificial intelligence (AI)-driven semiconductor demand and expectations of corporate governance improvements.
According to financial industry sources on the 25th, JPMorgan maintained its “Overweight” recommendation on Korean equities and raised its 12-month Kospi target to 12,500 in a recent report. The bank also presented a bullish scenario of 15,000 and a bearish scenario of 8,000, reflecting a wide range of potential outcomes amid market uncertainty.
JPMorgan identified AI-related hardware earnings growth as the primary driver of the Korean market’s upside potential. The bank highlighted that expanding investment in AI infrastructure, particularly data centers, is structurally increasing demand for memory semiconductors, supporting a longer and stronger industry cycle.
The report described the semiconductor cycle as likely to remain “higher for longer,” suggesting that sustained AI investment could extend profitability gains for Korean chipmakers over an extended period rather than a short-term upswing.
Beyond semiconductors, JPMorgan also pointed to improving earnings momentum in industrials and financials, as well as valuation re-rating potential driven by corporate governance reforms. The bank emphasized that AI-related economic gains are not limited to corporate profits but are also contributing to broader wealth creation across households and the public sector.
Retail investor participation remains a key stabilizing factor in the Korean market. JPMorgan estimated that domestic individual investors have made approximately $80 billion in net equity purchases year-to-date, providing strong support for market demand amid limited foreign inflows.
At the same time, the bank noted persistent volatility risks. It estimated that foreign investors have sold roughly $95 billion worth of Korean equities so far this year, with outflows concentrated in large-cap semiconductor stocks due to global portfolio rebalancing and capacity constraints among international funds.
JPMorgan also warned that rising use of leveraged exchange-traded funds (ETFs) and increased derivatives trading in the domestic market could further amplify short-term volatility.
Despite these risks, the bank maintained that structural growth drivers remain intact. It concluded that Korea’s equity market continues to offer attractive long-term opportunities, supported by AI-driven earnings expansion and ongoing corporate governance improvements that could drive further valuation upside.
