Semiconductor Peak in Early 2027, KOSDAQ Is a Bubble: Kwak Sang-jun's Warning

"KOSPI soared on Samsung and SK Hynix's wings, but the real economy is imbalanced… even restaurants in Yeouido empty out by 9 PM"

As KOSPI broke above the 6,900 level on the strength of two semiconductor stocks and Goldman Sachs mentioned a KOSPI target of 8,000, a note of caution emerged. Kwak Sang-jun, CEO of Matrix Investment Advisor, recently appeared on the Chosun Ilbo Money YouTube channel and made sobering remarks against the market's euphoria.

"The capital markets improved first, but the real economy remains imbalanced. Even restaurants in Yeouido are empty by 8 or 9 PM. The broader economy isn't really in great shape yet.""""— Kwak Sang-jun, CEO of Matrix Investment Advisor"

Two Reasons Behind KOSPI's Rise

Kwak attributed KOSPI's ascent to two factors. First, the surge in profits at Samsung Electronics and SK Hynix. Since October last year, both companies' earnings have grown beyond expectations. Second, the value-up policy and its multiplier effect. "Japan saw its index quadruple to quintuple over 10 years through value-up initiatives, so similar expectations have emerged for Korea," he explained.

However, even if these two pillars push KOSPI near 7,000, further upside in valuation multiples will be difficult without earnings participation from other companies. Valuation multiples represent how many times a stock trades relative to earnings—they expand as market sentiment improves.

Semiconductor Stock Peak May Come in Early 2027

He also provided specific insight on when semiconductor stocks might peak.

"Both Samsung Electronics and SK Hynix have confirmed capacity expansions scheduled for 2028. Looking at historical patterns, stock peaks have preceded earnings peaks by 1 to 1.3 years. Samsung Electronics' stock peak in January 2021 is an example—actual earnings peaked in 2023. Given the supply increases in 2028, we should prepare for the possibility of a stock price peak in early 2027.""""— Kwak Sang-jun, CEO of Matrix Investment Advisor"

It's noteworthy that Morgan Stanley analyst Sean Kim recently raised Samsung Electronics' operating profit forecast to mid-600 trillion won through 2028, shifting from bearish to bullish. "When everyone turns positive, it means everyone has already bought. Without new buyers, stock prices won't rise further."

KOSDAQ Is a Bubble

He used even stronger language about KOSDAQ breaking the 1,200 level: "It's not just expensive—it's a bubble." His reason: there are barely any companies generating real profits.

He specifically noted that secondary battery stocks have seen their price appreciation driven by optimism about sector improvement, but actual earnings haven't caught up yet. Construction stocks that have risen on overseas reconstruction tailwinds also warrant caution. "Historically, more construction firms have lost money on overseas projects than made it. The stock market isn't a food game—it's about not breaking your plate."

ELS: Attractive to Whom?

He expressed caution about the recent surge in capital flowing into ELS (Equity Linked Securities). ELS issuance by the top 10 securities firms in Q1 this year reached 5.59 trillion won, up 16.2% year-over-year.

"ELS is definitely an attractive product for financial companies. Whether it's attractive for investors requires careful scrutiny." He pointed out the structural issue: investors receive fixed annual returns of 5-6%, but financial company fees are charged separately.

He explained that as stock prices continue rising, the option premiums that generate returns behind ELS decline, and as early redemptions repeat, the yield of newly issued ELS gradually falls. This mirrors the pattern from 2020-2021 when capital flooded into ELS during the COVID rally, only for investors to be hit hard by the Hong Kong ELS crisis.