Institutional Research

The report forecasts Korean GDP growth of 3.4% in 2026 and 2.7% in 2027, driven initially by semiconductor exports and then by investment, household income and fiscal expansion. It argues that the windfall could materially lift growth and potential output over the next three to five years.

• GDP is forecast to grow 3.4% in 2026 and 2.7% in 2027, versus 1.1% in 2025.
• AI-led semiconductor exports, higher margins and stronger terms of trade are expected to lift national income beyond measured real GDP.
• Combined five-year income-tax payments by Samsung Electronics and SK hynix could reach KRW1,050tn.
• Chipmakers' domestic investment commitments could add 120-150bp to GDP growth over five years if delivered on time.
• Morgan Stanley expects the BoK policy rate to reach 3.50%, with hikes projected in November and February 2027.

Global BEV sales rose 1% year on year and 2% month on month to 967k units in August, with China strengthening while the US remained weak. J.P. Morgan retains its lithium-deficit view through 2029 but cuts its 2027–28 spodumene price forecasts and names PLS as its top pick.

• Global BEV sales reached 967k units in August, up 2% month on month and 1% year on year, but flat year to date.
• China BEV sales rebounded 8% month on month to 698k units; BEV penetration reached 45% and total EV penetration reached 65%.
• US BEV sales rose to 80k units but remained down 31% year to date, with penetration unchanged at 6%.
• EU-10 BEV sales fell 14% month on month to 189k units, though they were up 40% year to date and penetration increased to 29%.
• J.P. Morgan cut its spodumene forecasts by about 13% to US$2,400/t for 2027 and 16% to US$2,000/t for 2028.

Bernstein sees August data as further evidence of a gradual Swiss-watch recovery: global export value turned positive on a 12-month moving-average basis for the first time in two years, while Greater China also returned to growth. The recovery remains fragile amid macro, inflation and tariff risks.

• August Swiss watch exports rose 9.1% year on year; adjusted for one extra working day, growth was about 4.1%.
• Global 12-month moving-average export value rose 0.2% year on year, its first positive reading in two years.
• Greater China 12-month moving-average exports increased 0.8% year on year, the first positive result since April 2024.
• US monthly exports fell 19.4%, but Bernstein attributes volatility largely to sell-in timing and views consumer demand as resilient.
• Gold-steel watches remained the strongest material category, with 12-month moving-average value growth of 14.5%.

Management expects stable market share in 2027 despite estimated industry volume growth of about 6% year on year. Morgan Stanley highlights reverse-logistics growth and potential pricing support, but retains an Underweight rating and Rmb5.50 target price.

• Management expects stable 2027 market share amid roughly 6% industry volume growth.
• Fourth-quarter 2026 growth is expected to accelerate mildly from a low base in 4Q25.
• Reverse-logistics volume reached 3 million parcels per day, versus 1 million earlier in 2026.
• Yiwu anti-involution initiatives may reverse price cuts that began in July 2026.
• Annual capex is expected to remain at Rmb2 billion in 2026 and 2027.

The report argues that concerns over export VAT refunds, US hydraulic-cylinder investigations, weaker domestic sales and US rates triggered the selloff, but companies continue to report steady operations. Morgan Stanley remains positive on sector fundamentals while retaining an In-Line industry view.

• Sany, Hengli Hydraulic and Zoomlion fell 6.7%, 6.3% and 3.7%, respectively, versus CSI 300 up 0.7%.
• A possible export VAT-refund cut is not in the base case, but could materially affect margins because machinery currently receives a 13% refund.
• Morgan Stanley expects a stronger domestic replacement cycle in 2027, continued overseas share gains and easing margin pressure.
• Hengli expects limited exposure to US AD/CVD investigations, supported by low direct US sales, alternative production capacity and potential tariff pass-through.

Goldman Sachs argues that higher starting yields are moving balanced portfolios back toward more normal strategic bond weights of 35–55%. Near term, however, inflation, energy prices, central-bank policy and still-resilient equity earnings make the case for adding long-duration bonds less clear.

• US 10-year yields at 5% are near the 250-year average of 4.7%, rather than exceptionally high by long-run standards.
• Higher yields raise bond carry and reduce duration risk over longer holding periods, supporting a strategic normalization in bond exposure.
• Goldman Sachs remains neutral across assets over a tactical three-month horizon.
• For 12 months, the report remains overweight equities, neutral bonds and underweight credit, supported by expected double-digit but slower 2027 earnings growth.
• Bonds are expected to provide more income but less dependable portfolio protection than during the post-GFC era.

Bernstein argues that Korea does not need a globally dominant foundation model for sovereign AI to matter: a credible fallback can provide resilience and bargaining power. The larger commercial contest is whether Naver and Kakao can turn their local commercial and relationship data into AI-driven execution before global agents become the default interface.

• The report frames sovereign AI as an option on operational resilience rather than proof of global platform leadership.
• Korea's indigenous-model program targets roughly 95% of leading global-model performance by 2027, but Bernstein considers credible substitutability across the AI stack the more relevant test.
• Naver's infrastructure and cloud strategy offers a lower-risk route to AI-demand exposure, while commerce agents provide the greater upside.
• Kakao's relationship context and KakaoTalk distribution must translate into delegated actions rather than remain simple engagement.
• ChatGPT reached 17.1 million Korean mobile MAUs in August 2026, underscoring the urgency for local platforms.

Morgan Stanley highlights weak industry conditions, weather disruption and intense promotions, while Eastroc's tea business, channel expansion and resilient Water Boost share provide offsetting support. The report retains an Overweight rating and Rmb165.00 target price.

• Industry sales remained soft in 3Q26 amid unfavorable weather and competition.
• Tea was the strongest category in July-August, led by Tea of Fruits.
• Snack retail, restaurant channels and smart-vending pilots are strategic expansion priorities.
• Second-half 2026 selling expenses should ease after front-loaded fridge and World Cup spending.
• 2027 margin visibility is lower because of raw-material costs, mix shifts and promotional intensity.

Goldman Sachs argues that ON's 9% post-event decline was overdone, citing a credible route to 2030 growth in AI data centers, automotive, and industrial power products. The firm remains Neutral with a $95 12-month target price.

• Management targets 12%-14% revenue CAGR through 2030, reaching about $11 billion of revenue.
• The 2030 model targets 53% gross margin, about 38% operating margin, and more than $3.5 billion of free cash flow.
• AI data-center revenue is guided to double year-on-year in both 2026 and 2027, then rise from about $500 million in 2026 to about $2.5 billion in 2030.
• Automotive and industrial revenue are expected to grow at 9% and 10% CAGRs, respectively, through 2030.
• Goldman Sachs highlights automotive demand and gross-margin execution as the key risks.

HSBC argues that faster August breeding-sow reductions and limited scope for capacity to rebound by year-end should strengthen the 2027 hog-price upcycle. It favors cost leaders Muyuan and Wens while revising estimates and target prices for Dabeinong, Tecon and New Hope.

• China’s breeding-sow inventory fell 1.61% month-on-month and 7.1% year-on-year in August 2026, versus declines of 1.48% and 6.6% in July.
• HSBC expects capacity destocking to accelerate in 3Q26 and slow in 4Q26, with sow inventory unlikely to rebound by end-2026.
• The report considers market concerns over productivity-driven oversupply overstated because official-data MSY is 17.8 versus SCI’s 21.52 hogs per sow per year.
• Muyuan and Wens retain Buy ratings; Dabeinong remains Buy with a lower RMB4.90 target price, Tecon remains Hold with a higher RMB7.50 target price, and New Hope remains Reduce with a higher RMB6.20 target price.