Kospi's fall from 9,000 to 6,000 forces brokerages to wave white flag: target-price cuts overtake upgrades for first time

As the Kospi collapsed from the 9,000 level to the 6,000 range in just 17 trading sessions, brokerages are rapidly marking down their valuation targets. Research notes cutting target prices — which analysts are typically reluctant to issue — have outpaced upgrade notes for the first time this month, as concerns over a semiconductor cycle slowdown, geopolitical risk from the Middle East and downward earnings revisions converge.

According to financial data provider FnGuide, 323 target-price cut notes were published this month (July 1–16), outpacing 247 upgrade notes by 76.

The mood had been the opposite for most of this year. In January, upgrade notes numbered 940 — more than four times the 228 cut notes — and February showed an even wider gap, with 1,122 upgrades against 116 cuts. March recorded 434 upgrades and 74 cuts, while April and May each saw upgrades far outnumber cuts, with 1,076 and 1,004 upgrade notes against 274 and 248 cut notes, respectively.

The shift began in June, when upgrade notes dropped to 289 while cut notes climbed to 131, rapidly narrowing the gap. After the Kospi hit a record intraday high of 9,385.59 on June 19, peak-cycle fears in semiconductors, Middle East geopolitical risk and heavy foreign selling combined to drive the index down to the 6,000 range within 17 trading sessions — and this month, cut notes have overtaken upgrades for the first time.

Market participants view the reversal as unusual. Kim Jun-seok, a senior research fellow at the Korea Capital Market Institute, said analysts "may tend to issue optimistic outlooks in order to contribute to their firm's brokerage and investment banking revenue, or to maintain smooth relationships with listed companies." Against that backdrop, the fact that target-price cuts have now surpassed upgrades signals that brokerages have turned markedly more conservative in their view of the market and corporate earnings, analysts said.

The wave of target-price cuts has not been confined to any single sector. Ahead of the earnings season, adjustments have come across semiconductors, autos, defense, shipbuilding, biotech and secondary batteries. Companies that have seen their targets lowered include Hanwha Aerospace, Hyundai Motor, Hyundai Mobis, LG Energy Solution, Samsung SDI and HD Korea Shipbuilding & Offshore Engineering. While the degree varies by sector, analysts say the recent sharp market decline and downward earnings revisions are together driving a broader reassessment of corporate valuations.

Even as valuation targets have been lowered across sectors, investor attention has remained firmly on semiconductors. All 10 of the most-read research notes published this month (July 1–16), as tallied by FnGuide, were company analyses of Samsung Electronics or SK hynix, or semiconductor strategy and market outlook reports. The most-read note was Korea Investment & Securities' "SK hynix 2Q26 Preview: Quarterly profit to surpass full-year 2025 earnings," with 2,512 views. It was followed by BNK Investment & Securities' SK hynix analysis note (1,808 views), KB Securities' semiconductor strategy note (1,691 views) and Meritz Securities' Samsung Electronics analysis note (1,581 views).

The market sees this second-quarter earnings season as a potential turning point for the target-price adjustment trend. Alphabet is set to release its second-quarter results and AI capital expenditure guidance on Monday (local time), followed by SK hynix's earnings announcement on Tuesday. A key variable is whether Alphabet's AI investment plans can ease recently heightened concerns about a slowdown in AI spending and a semiconductor cycle peak. If results or guidance fall short of market expectations, brokerages may continue cutting their earnings estimates and target prices, analysts said.

Corporate valuations are expected to be reassessed in light of the earnings results. Kim of the Korea Capital Market Institute said the investment opinions and target prices analysts publish are "a summary expression of a comprehensive assessment covering a company's share price level, earnings changes, industry trends, competitive environment and business strategy."