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UBS cuts KOSPI target by nearly 10% on worsening macro headwinds
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UBS has lowered its 12-month target for South Korea's KOSPI index by nearly 10%, from 8,800 to 8,000 points, citing deteriorating macroeconomic headwinds including rising interest rates, a stronger South Korean won, and higher oil prices. Analyst Yong-Suk Son stated in a report last Friday that the downgrade reduces the implied price-to-earnings ratio from 8x to 7x, reflecting worsening macro conditions despite strong earnings growth. UBS still forecasts robust KOSPI earnings per share growth of 256% in 2026 and 38% in 2027, but expects the index to remain largely range-bound until the upcoming third and fourth quarter earnings seasons provide clearer guidance on earnings sustainability and shareholder return measures. Son noted that the 10-year Korean government bond yield has risen from 3.4% at the start of the year to 4.5%, the Bank of Korea has raised rates twice since July, and oil prices are above $100 per barrel, all pressuring the market. A stronger won is an additional drag, with UBS estimating that every 1% appreciation in the won reduces KOSPI earnings by approximately 1.1%.
Source report
September 21 — UBS has lowered its 12-month target for South Korea's KOSPI index from 8,800 to 8,000 points, citing rising interest rates, a stronger won, and higher oil prices.
In a report released last Friday, analyst Yong-Suk Son noted that the downward revision reduces the implied price-to-earnings (P/E) ratio from 8x to 7x, reflecting deteriorating macroeconomic headwinds despite still-strong earnings growth.
Key factors behind the revision include:
- Rising bond yields: The 10-year Korean government bond yield has climbed from 3.4% at the start of the year to 4.5%.
- Monetary tightening: The Bank of Korea has raised interest rates twice since July.
- Elevated oil prices: Crude oil remains above $100 per barrel.
- Won appreciation: UBS estimates that every 1% appreciation in the Korean won reduces KOSPI earnings by approximately 1.1%.
UBS continues to forecast strong earnings per share (EPS) growth for the KOSPI of 256% in 2026 and 38% in 2027. However, Son expects the index to remain largely range-bound until the upcoming third- and fourth-quarter earnings seasons provide clearer guidance on earnings sustainability and shareholder return measures.
Source
domesticNeutral / independent
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UBS cuts KOSPI 12-month target by 9% to 8,000 on rising rates and oil prices