Korean stocks fell over 8% on July 13, triggering a circuit breaker as the KOSPI dropped to 6871.20 amid sharp declines in Samsung Electronics and SK Hynix. Goldman Sachs maintained its 12000 KOSPI target in a report issued the same day, calling the market oversold with a 12-month forward price-to-earnings ratio of 6.2x, the lowest since 2004. Morgan Stanley also kept its 12000 target, noting over 70% of KOSPI stocks trade below 1x price-to-book ratio despite solid earnings.
Goldman Sachs Identifies Oversold Territory with 6.2x Forward P/E
Goldman Sachs stated in its July 13 weekly report on Korean stocks that "despite Samsung Electronics recently announcing its largest quarterly earnings ever, the KOSPI fell more than 8%, with the 12-month forward P/E reaching 6.2x, the lowest level since 2004 and lower than the 2008 financial crisis low." The investment bank described the situation as "a sell-off with the KOSPI down approximately 20% from its June peak."
The report noted that "the RSI (Relative Strength Index), which shows the degree of stock overselling, has also fallen to its lowest level since April 2025, indicating the possibility of entering an attractive risk-reward zone from a valuation perspective." Goldman Sachs maintained the KOSPI target of 12000 it presented in early June.
Morgan Stanley Highlights 70% of KOSPI Stocks Below 1x P/B
Morgan Stanley emphasized that most KOSPI-listed companies remain undervalued. The firm stated that "Samsung Electronics' forward P/E is also 4.8x, the lowest since 2000, and even excluding the top 2 stocks, the 12-month forward P/E of KOSPI-listed companies is 10.1x, still the lowest level in the Asian region." The report added that "more than 70% of KOSPI companies are trading at a P/B below 1x."
Morgan Stanley maintained the KOSPI index target of 12000 it presented on July 3. The firm stated it "presents industrials, power infrastructure, governance improvement-related stocks, semiconductor equipment supply chain, and reflation trade (investment in cyclical stocks and raw materials based on economic and inflation growth predictions) as preferred themes." The report noted that "ERLI (Earnings Revision Leading Indicator) is expected to see somewhat slower upward momentum due to the manufacturing PMI (Purchasing Managers' Index) slowdown."
Circuit Breaker Activated at 6871.20 on July 13
The KOSPI triggered a first-stage circuit breaker at 1:28 PM on July 13 after falling more than 8%. At the time of circuit breaker activation, the KOSPI index stood at 6871.20, down 604.74 points (8.08%) from the previous trading day. The index fell below 7000 for the first time in 48 trading days as market capitalization leaders Samsung Electronics and SK Hynix plunged. The KOSPI opened at 7412.03, down 63.91 points from the previous day, before declining over 6% as semiconductor large-cap stocks fell sharply. The Korea Exchange announced it activated the circuit breaker, suspending trading in the securities market for 20 minutes after the KOSPI index sustained a decline of 8% or more from the previous day's closing price for 1 minute.
FAQ
What triggered the circuit breaker in Korean stocks on July 13?
The KOSPI index fell more than 8% on July 13, reaching 6871.20 at 1:28 PM, which triggered a first-stage circuit breaker. The Korea Exchange suspended trading for 20 minutes after the index sustained a decline of 8% or more from the previous day's closing price for 1 minute. The decline was driven by sharp drops in market capitalization leaders Samsung Electronics and SK Hynix.
Why does Goldman Sachs maintain a 12000 KOSPI target despite the 8% decline?
Goldman Sachs stated in its July 13 report that the KOSPI's 12-month forward P/E reached 6.2x, the lowest level since 2004 and below the 2008 financial crisis low. The firm described the market as oversold, with the RSI falling to its lowest level since April 2025, indicating an attractive risk-reward zone from a valuation perspective. Goldman Sachs maintained the 12000 target it presented in early June.
What is Morgan Stanley's valuation assessment of KOSPI stocks?
Morgan Stanley stated that Samsung Electronics' forward P/E is 4.8x, the lowest since 2000, and that even excluding the top 2 stocks, KOSPI-listed companies' 12-month forward P/E is 10.1x, the lowest in the Asian region. The firm noted that more than 70% of KOSPI companies trade at a P/B below 1x. Morgan Stanley maintained its 12000 KOSPI target presented on July 3.
