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Investing.com-- Macquarie analysts are optimistic about South Korea’s stock market, predicting the KOSPI index could rally to 4,000, driven by strong corporate earnings, favorable policies, and a resurgence in foreign and retail investor interest.
In a research note, analysts highlighted a "secular rather than cyclically" rally, fueled by exports beyond China, including neo-industrials like shipbuilding and defense, as well as the global expansion of K-wave culture.
They noted retail investors were returning to domestic equities after a two-year shift to U.S. markets, while foreign inflows rebounded with a $2.5 billion net buy in June.
The report emphasized government efforts to improve corporate governance and tax reforms aimed at boosting dividends, which could narrow the "Korea discount."
Macquarie’s top picks include SK Hynix Inc (KS:000660), Samsung Biologics Co Ltd (KS:207940), and K-wave beneficiaries like d’Alba Global.
"Even amid a strong rally for the Korea equity market, we believe there are still many opportunities for multiple increases in undervalued sectors such as banks, auto, and semiconductors," analysts wrote.