KOSPI fell to the 7,430 level on the 7th day with its 12-month forward price-to-earnings ratio reaching 6.43x, despite Samsung Electronics reporting second-quarter operating profit of 89.4 trillion won exceeding consensus by 5.4%. Analyst Kim Dae-jun of Korea Investment & Securities attributed the decline to foreign net selling after earnings material was exhausted, with volatility amplified by leveraged ETF activity. The current valuation sits -2.7 standard deviations below the 10-year average PER, placing KOSPI in an extreme undervaluation zone comparable to the 2008 global financial crisis when closing PER fell below 7x on only six days historically.
Samsung Electronics Q2 Operating Profit Exceeds Consensus by 5.4%
Samsung Electronics reported second-quarter revenue of 171 trillion won and operating profit of 89.4 trillion won, surpassing the consensus estimate of 84.8 trillion won by 5.4%. Despite the strong earnings results, foreign investors continued net selling, pushing KOSPI below its 60-day moving average. Kim noted that the pattern of selling after earnings announcements has repeated historically, viewing this decline as driven by the exhaustion of earnings expectations as a catalyst. The decline was amplified to excessive levels due to increased market volatility following the launch of leveraged exchange-traded funds.
KOSPI 12-Month Forward PER Reaches 6.43x
The current KOSPI level of 7,430 corresponds to a 12-month forward PER of 6.43x, which is -2.7 standard deviations below the recent 10-year average PER. According to Kim, since the 2008 financial crisis, closing-basis 12MF PER fell below 7x on only six days. The lowest closing PER was 6.27x on October 24, 2008 (Friday), while the intraday low was 6.07x on October 27, 2008 (Monday). During that period, PER remained below 7x for five consecutive days from October 23 to October 29. The current streak has lasted four consecutive days (the 2nd, 3rd, 6th, and 7th), showing a flow similar to the 2008 financial crisis phase.
Circuit Breaker Triggered for Sixth Time This Year
The sharp decline on the 7th day triggered a circuit breaker, marking the sixth occurrence this year and the 12th in history. Kim stated that while investor sentiment has contracted due to the short-term plunge, the PER multiple indicates entry into an extreme undervaluation zone. He suggested potential for a rebound in the semiconductor sector if the index recovers, while adding that attention should also be maintained on financial and inbound consumption-related stocks considering high interest rates and high exchange rate conditions.
FAQ
What is KOSPI's current 12-month forward PER?
KOSPI's 12-month forward price-to-earnings ratio reached 6.43x at the 7,430 level, which is -2.7 standard deviations below the recent 10-year average PER.
How did Samsung Electronics' Q2 results compare to expectations?
Samsung Electronics reported second-quarter operating profit of 89.4 trillion won, exceeding the consensus estimate of 84.8 trillion won by 5.4%, with revenue of 171 trillion won.
How many times has KOSPI's PER fallen below 7x since 2008?
Since the 2008 financial crisis, KOSPI's closing-basis 12-month forward PER fell below 7x on only six days, with the lowest closing level at 6.27x on October 24, 2008.
