South Korea’s blistering stock rally has left investors facing an unlikely backdrop: equities trading at record-low valuations.
The Kospi has climbed around 80% this year to a series of record highs, yet analyst earnings upgrades have been even faster. Surging profits at memory-chip giants Samsung Electronics Co. and SK Hynix Inc. have driven the benchmark to just 6.4 times forward earnings, below even the levels seen during the 2008 global financial crisis.
The sharp sell-off in recent days, sparked by fresh doubts over the artificial-intelligence trade, compressed valuations further. For investors, the question is whether record cheapness signals an opportunity or reflects a market pricing in the eventual end of the memory boom.
“Good buy or not really depends on individuals’ portfolios: If one is not exposed much to these names, it is a great time to get into provide the growth component for the portfolio tied into the AI theme,” said Francis Tan, Asia chief strategist at Indosuez Wealth in Singapore. “Earnings are robust and still forecast to be strong.”
