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Investing.com -- UBS has raised its KOSPI target by 4% to 3,550, citing an improving memory cycle, easing trade risks, and signs of progress on policy reforms.
“We raise our KOSPI index target by 4% to 3,550 (1.1x P/BV, unchanged) as we reflect a better memory cycle and encouraging signs on policy reforms after perceived setbacks in Jul/Aug,” UBS analysts wrote.
They added that “tariff outcome risks remain, as a US trade agreement has not been finalised,” but said “receding trade uncertainties for tech and healthy memory demand should support a clearer path for market EPS expansion in 2026E.”
UBS expects earnings growth to outpace regional peers. “We expect EPS growth of 26%/20% in 2025/26E, ahead of AxJ peers,” the bank said, noting its revised forecasts are now the highest in the region.
Policy remains a key driver. UBS highlighted that “policy reform [will] remain front and centre, with President JM Lee emphasising a need for better corporate governance and upside to KOSPI while capping real estate market during his first 100-day press conference on 11 Sep.” Two revisions to the Commercial Act were passed earlier this year, with a third, including “mandatory cancellation of treasury shares planned for Sep.”
On sectors, UBS said it prefers “defensive, quality and select themes, but are adding some value (tech, auto) to our most preferred list.” It also removed Doosan Enerbility from that list, while adding Eugene Tech and Kia.
UBS concluded that valuations “remain undemanding considering the cycle and the corporate reforms ahead,” with upside and downside targets of 4,150 and 2,700, respectively.