MORGAN STANLEY upgraded South Korea equities to overweight from neutral, saying
recent deleveraging improves entry points for AI and an industrial supercycle
trade. Strategists led by Daniel K Blake estimate KOSPI has about 36% upside to
their 9,000 target after large unwinds of crowded and leveraged positions.
index fell as much as 5.5% on Monday following a record 18% jump on Friday.
Morgan Stanley describes the recent sell-off as mainly technical and says
deleveraging of leveraged ETFs, hedge-fund leverage and retail margin trading is
more than half complete. It sees KOSPI trading in a 5,500–10,500 range near
term, and expects Samsung Electronics and SK Hynix to provide valuation support;
industrials, defense and financials are likely beneficiaries.