Nomura Keeps Long-Term Kospi Target at 10,000, Sees 7,500-8,000 in 3 Months

The Kospi has undergone a sharp correction, but Nomura has maintained its long-term view that the benchmark index can rise to 10,000. The Japanese investment bank said structural drivers for Korean equities, including earnings growth and stronger shareholder returns, remain intact.

According to industry officials on November 6, Nomura presented the outlook in a November 5 report titled “The Next Phase of Korea’s Stock Market Reform.” It kept its long-term Kospi target at 10,000. But it set a three-month target range of 7,500 to 8,000, citing uncertainty over interest rates, oil prices and artificial intelligence investment.

Nomura said the recent market decline has significantly reduced valuation pressure in Korean equities. Based on the Kospi’s previous close of 5,383, the index’s projected 2027 price-to-earnings ratio fell to 3.8 times and its price-to-book ratio to 1.1 times.

The bank cited four medium- to long-term drivers for further gains: earnings improvement from increased AI investment, a rise in share buybacks, the impact of revisions to the Commercial Act, and broader shareholder-rights activism by institutional and activist investors. In its view, market reform is moving beyond the creation of rules and into actual corporate management.

Nomura also said the benefits of AI investment are likely to spread more widely. Demand could expand beyond memory and server components to nuclear power, electrical equipment and batteries.

The bank was also positive on stronger shareholder returns. According to Nomura, Kospi-listed companies have announced 77.6 trillion won ($56.0 billion) in share buybacks this year and 62 trillion won ($44.7 billion) in share cancellations, about 3.5 times last year’s full-year level. It said active shareholder-return measures by large companies such as Samsung Electronics and SK Hynix are supporting a broader market push to boost corporate value.

Nomura applied a projected 2027 PER of 7.1 times to its 10,000 Kospi target. Its three-month target range of 7,500 to 8,000 implies a PER of 5.3 to 5.7 times.

In the short term, the bank said high interest rates and oil prices, along with uncertainty over AI data center construction schedules, capital expenditure and financing conditions, could increase volatility. Concerns that AI data center regulation in the US could tighten after the recent midterm elections have also contributed to the correction in Korean equities.

Cindy Park, head of research at Nomura, said tighter data center regulation would be more likely to delay projects or shift construction sites than lead to cancellations. She added that the impact on Korean memory makers after 2028 would probably be more limited than the market fears.