Wall Street Sees Kospi Near Bottom After 30% Slide; Citi Keeps 10,000 Target, Morgan Stanley Holds 9,000

South Korea’s Kospi index has plunged more than 30% from its peak, and major Wall Street banks say the market may be nearing a bottom.

BlockBeats reported on July 21 that after the Kospi hit a record high on June 22 and then fell more than 30%, institutions including Citi and Morgan Stanley concluded South Korean equities were approaching bottom levels.

Citi wrote in a July 20 report that the latest selloff was a “technical correction,” not a sign of weakening fundamentals. It maintained its 10,000 target for the Kospi, implying upside of more than 50% from the July 20 close.

The bank said South Korea’s economic fundamentals remain solid and the policy backdrop is broadly supportive. With many of the market’s main overhangs already easing, current index levels offer strong investment appeal.

Morgan Stanley also kept its Kospi target at 9,000. It said forward valuations for the Kospi and semiconductor stocks are nearing historical lows, and that several indicators point to the market approaching a bottom.

Still, Morgan Stanley lowered its bear-case target to 6,000 to reflect the possibility of slower earnings growth. It projected a 6,000 to 9,000 trading range over the next three to six months.

Both banks advised investors to position for a rebound while maintaining defensive exposure. Morgan Stanley said it continues to recommend a barbell strategy that pairs large-cap technology stocks with defensive shares.

According to Bitget price data, the Kospi rebounded about 4% on July 21. Samsung Electronics rose nearly 7%, while SK Hynix gained about 5%, leading the recovery.

Concerns over the outlook for artificial intelligence spending, the index’s concentration in a small number of heavyweight stocks and large-scale leveraged speculation by retail investors were cited as drivers of the selloff.

BlockBeats said South Korean retail investors were under especially heavy loss pressure. Since the launch of single-stock leveraged exchange-traded funds on May 27, their net purchases have totaled 14 trillion won, or about $9.4 billion. That compares with foreign investors’ net purchases of about 2 trillion won.

The sharp declines in Samsung Electronics and SK Hynix likely intensified losses on those leveraged positions.

The macro backdrop has also added pressure. BlockBeats said the Bank of Korea raised its benchmark interest rate by 0.25 percentage point last week to 2.75% and said inflation could remain above its 2% target for a considerable period.

Morgan Stanley said volatility in South Korean equities could persist for now because uncertainty remains over AI spending trends, the pace of capital spending by major cloud companies and semiconductor supply conditions.