Korea: From “discount” to re-rating

Deutsche Bank

Jacky Tang, Heval Ag

Research

14 Pages

Deutsche Bank examines whether Korea’s equity rally can move from a valuation discount toward a broader re rating. AI memory demand, earnings upgrades, and governance reforms support the bull case, while Middle East energy risks and chip concentration keep volatility high.

Key Takeaways

Earnings Upgrade Cycle: KOSPI earnings rose almost 40% in 2025, while 2026 forward earnings forecasts were revised upward by 102% over six months.
AI Memory Tailwind: Korean manufacturers report 2026 memory chip output is fully sold out, with tight supply conditions potentially continuing into 2027.
Discount Still Visible: KOSPI trades near 8x forward earnings, below its 10 year average of 10.5x and at a 36% discount to regional peers.
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