KB Securities: "KOSPI Entering Phase of Reduced Uncertainty"

KB Securities has forecasted that the KOSPI index, which has recently experienced repeated fluctuations, will stabilize due to the increasing likelihood of interest rate cuts by the U.S. Federal Reserve and the diversification of Google's artificial intelligence (AI) ecosystem.

Kim Dongwon, Head of Research at KB Securities, stated on November 28, "The KOSPI index has seen heightened volatility after more than three weeks of corrections. This is due to three factors: short-term dollar liquidity tightening, weakened expectations for a Fed rate cut, and concerns over an AI bubble. However, starting in December, these three concerns are expected to subside."

Amid the rise of major tech stocks leading to gains across the three major indices on the New York Stock Exchange, the KOSPI also recovered the 4000 level during the session on the 27th. The status board at the Hana Bank dealing room in Jung-gu, Seoul, displayed the KOSPI, USD/KRW exchange rate, and KOSDAQ index. On that day, the KOSPI opened at 3989.45, up 28.58 points (0.72%) from the previous day, quickly surpassing the 4000 mark. November 27, 2025 Photo by Jo Yongjun

Kim explained, "The short-term dollar liquidity crunch has mainly been driven by the depletion of the Federal Reserve's reverse repo balance. However, since the Fed is likely to shift to a quantitative easing policy next year following the end of quantitative tightening on December 1, the short-term liquidity crunch in the dollar is expected to gradually ease."

He continued, "Although Federal Reserve officials are divided over a rate cut in December, the Fed's Beige Book for November indicates a slight decrease in employment and weakened labor demand in half of the regions, suggesting a high probability of a rate cut in December. The probability of a rate cut stands at 85%."

Kim also noted that the recent release of Google's latest AI model, Gemini 3, is expected to be a decisive factor in alleviating concerns over an AI bubble. He said, "Google AI is expected to address doubts about AI profitability, such as the large-scale capital expenditures by big tech companies, increased depreciation costs, and low investment efficiency."

He added, "In particular, TPUs (Tensor Processing Units) often deliver higher efficiency in matrix operations and inference than GPUs, resulting in greater efficiency for specific applications. The cost per server is only about half that of GPUs, which is expected to significantly lower the total cost of ownership (TCO) for AI services. By integrating TPUs with search advertising, YouTube, and Gemini, Google has established a concrete AI revenue model, which is expected to serve as a decisive turning point in alleviating future concerns over an AI bubble."

Kim also predicted that Google's TPUs, optimized for inference AI, will lead to a sharp increase in storage operations rather than repetitive learning, causing a surge in demand not only for HBM but also for general-purpose DRAM. He expects Samsung Electronics and SK Hynix to be the biggest beneficiaries.

He stated, "With the expansion of the inference AI market and the spread of AI application services, the surge in server data processing will drive server DRAM demand up by 35% year-on-year in 2026, while supply will increase by less than 20%, resulting in a severe supply shortage and continued price hikes. For Broadcom, which is responsible for designing and manufacturing Google's TPUs, it is estimated that Samsung Electronics and SK Hynix will account for 90% of Broadcom's HBM supply in 2026, making them the biggest beneficiaries of the expansion of Google's AI ecosystem."

Kim projected that KOSPI operating profit in 2026 will increase by 43% year-on-year to 441 trillion won. He said, "Of the 143 trillion won increase in KOSPI operating profit next year, Samsung Electronics, SK Hynix, and Korea Electric Power Corporation are expected to contribute 100 trillion won to 2026 operating profit, meaning that 70% of the increase will come from the semiconductor and power sectors."