Kospi Fund Managers Cut Targets Amid Election Uncertainty

South Korean fund managers have lowered their expectations for the Kospi index, projecting an upper end of 7,764 and a lower end of 6,051 over the next three months. This represents a significant drop from the previous survey in June, which had set targets at 9,630 and 7,478 respectively.

According to the Korea Economic Daily's survey of 53 fund managers, artificial intelligence (AI) is seen as the most promising sector for the next three months, with 79.2% of respondents identifying it as a key area of growth. Semiconductors followed closely behind at 73.6%. However, expectations for semiconductors have weakened somewhat since June, when 95.2% of fund managers picked them as a leading sector.

The survey also highlighted the US midterm elections as a major variable that will impact the stock market over the next three months, with 52.8% of respondents citing it as a key factor. The durability of the AI and semiconductor cycle, additional Fed rate hikes, rising bond yields, commodity prices, and inflation were also seen as significant factors.

Despite lowering their expectations for the Kospi index, fund managers remained relatively upbeat on the market's direction. A majority (71.7%) saw recent stock-market moves as a correction rather than the start of a bear market. Expectations for corporate earnings remain high, with 98.1% of respondents projecting an increase in operating profit at domestically listed companies in the third quarter.