KOREA WEEKLY KICKSTART: KOSPI Down 8.8% Amid Continued Momentum Unwind and Global Semiconductor Sell-Off
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Key Views
The 12-month forward EPS was revised down 0.4%, with utilities upgrading 3.2% and steel downgrading 5.7%. The won strengthened 1.2% against the USD. The Korea Equity Risk Indicator (GSSRKERB) dropped to -2.7, signaling deepening risk aversion. As of July 16, the KOSPI forward P/E fell to 5.8x — the lowest since 2004 and below the 2008 GFC trough — while forward P/B declined to 1.4x with ROE holding near 25%.
Outlook
The index has declined nearly 25% since June 22. Even under an extreme downside scenario — a 41% earnings cut matching the worst of the global financial crisis and a P/E at 2008 trough levels — the risk-reward remains favorable. Leverage ETFs comprise only about 5% of total ETF assets. Margin loan balances declined from a peak of KRW 38 trillion to KRW 33 trillion, yet the market-cap-adjusted ratio remains stable around 0.5%, suggesting systemic risk is contained. Key watchpoints include earnings revision trends, semiconductor sector dynamics, and leverage stability.
Key exhibits
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