Morgan Stanley: KOSPI to Hit 8,500 in Two Years

Morgan Stanley, in a report, stated that the KOSPI could rise to between 7,500 and 8,500 over the next two years, provided geopolitical risks ease and corporate reforms proceed smoothly. The current KOSPI forward price-to-earnings (PER) ratio of approximately 8.5 times, nearing its all-time low of 8 times, was cited as a basis for potential stock price gains.

The government's commitment to capital market and governance reforms has emerged as a factor supporting the market's downside. President Lee Jae-myung presided over a meeting at the Blue House titled 'Meeting for Capital Market Stabilization and Normalization.' Seok Joon, Head of Morgan Stanley's Korea division, who attended the meeting, proposed policies to encourage companies to newly acquire and retire their own shares. Jeong Eun-bo, Chairman of the Korea Exchange, announced that plans are underway to shorten the stock settlement cycle from the current T+2 to T+1.

Active participation in shareholder activism was also identified as a factor driving market growth. This trend was observed in companies such as Coway, DB Insurance, KT&G, LG Chem, Samsung C&T, and SM Entertainment. Companies have been increasing dividends or retiring treasury shares in response to shareholder demands, which is believed to have boosted market confidence.

Structural changes have been confirmed within large business groups like Hanwha, SK, LG, Lotte, and Hyundai Motor. While mid-sized business groups have shown a relatively passive stance, they possess greater growth potential if reforms are implemented.