Tuesday’s big hit in South Korea’s stock market appears to be a short-term rebound rather than the start of a long-term economic downturn, according to Morgan Stanley. The Kospi index fell about 10% during trading, its worst day since March. Tuesday was the sixth-worst session in benchmark history, according to FactSet. .KS11 YTD Mountain Kospi Index 2026 Morgan Stanley analyst Jun-seok said the index underperformed its peers due to its high exposure to memory stocks, which have fallen amid the global semiconductor recession. But Sok said the pain for investors is likely not to be long-term as the fundamentals of these stocks remain intact. “We consider this a breather rather than a breakdown,” Sok wrote in a Tuesday note to customers. Seok noted that Tuesday’s pullback followed a strong rally and is a sign that investors are looking to lock in profits. The Kospi rose more than 62% in the second quarter and is up nearly 95% in 2026, according to FactSet. Moreover, the index has become known for swinging wildly in either direction, he said. This feature may be partially linked to the relative concentration of company names such as SK Hynix and Samsung Electronics. “I’m starting to get tired,” Sok said. Although there are still bottlenecks in memory and other AI products, Sok said the stock should be able to recover from its recent downward trend. Besides tips, investors are also concerned about the possibility of monetary tightening, he said. As such, the analyst said he doesn’t expect a bear market, but instead should see it as a bear market while traders want more clarity on policy and AI trends. Mr Sok said he expected the second half of 2026 to be tougher than the first half. Still, he is targeting 9,000 people for Kospi, which would be an increase of nearly 10% from where it ended on Tuesday.
