Bank of Korea disputes 'semiconductor peak' theory, sees limited risk of market downturn

The Bank of Korea has pushed back against a growing 'semiconductor peak theory' that has gripped the domestic stock market. Recent sharp declines in shares of tech giants Samsung Electronics and SK Hynix, which fell for two consecutive days, fueled concerns that the market had reached its zenith. However, the central bank asserted that a sustained downturn is unlikely.

In a report submitted to the National Assembly's Finance and Economy Committee, the Bank of Korea stated that the possibility of a "trend reversal downward for domestic stocks is limited." The bank cited the continuous upward revision of earnings forecasts for semiconductor companies and the government's efforts to improve capital market systems as reasons for its optimistic outlook.

This view contrasts with warnings from major global investment banks. Goldman Sachs and Morgan Stanley, among others, had previously flagged concerns about the heavy concentration of investment in semiconductor stocks and the elevated expectations surrounding their performance. The recent market movements, with major semiconductor firms experiencing significant drops despite strong earnings reports, have amplified these worries, leading to a 5.35% drop in the KOSPI index on a single day.

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The possibility of a trend reversal downward for domestic stocks is limited.