Morgan Stanley upgrades South Korea's stock market to overweight with a 9,000-point target.

Huo Xing Capital News: On August 3, Morgan Stanley upgraded its rating on the Korean stock market to "Overweight" with a target of 9,000 points, implying a 36% upside from current levels. Morgan Stanley believes that the previous sharp deleveraging cycle is nearing its end, and KOSPI valuations have fallen to historic lows, creating a more attractive entry point for investors. Its data shows that hedge funds have completed approximately 75% of their deleveraging, while leveraged ETF assets have declined by 70% from their peak, significantly improving the ownership structure. Shawn Kim, Head of Morgan Stanley’s Asia Technology Team, highlighted three near-term catalysts for South Korean semiconductor stocks in the report. First, capital expenditures. The capital allocation moves by Samsung Electronics and SK hynix are viewed as the most important near-term catalysts. The market is awaiting specific announcements regarding their "value creation" initiatives and capital returns; although timelines remain unclear, expectations alone are already a potential catalyst. Second, HBM4 pricing. Samsung Electronics recently indicated that HBM4 will account for approximately 60% of its total HBM sales by the end of next year. If HBM4 prices reach the market’s expected level of over $3 per Gb, this could provide positive momentum for overall DRAM pricing in 2026–2027. Third, the iPhone 18 launch cycle. Mobile devices still account for 30% to 40% of global DRAM demand and 25% to 30% of NAND demand. According to feedback from Apple’s Korean supply chain partners—such as LG Innotek—Apple is optimistic about the iPhone 18 cycle, with expected unit shipments rising 5% to 10% year-over-year. The iPhone 18 is scheduled for release in September, with all initial models being Pro variants (including Pro, Pro Max, and foldable). Strong sales performance could provide a positive boost to Samsung Electronics and SK hynix.