KOSPI 3,800: Expert Stock Picks for Struggling Portfolios

The KOSPI 3,800 Era and the Struggles of Individual Investors

After hearing on the news that the KOSPI had reached 3,800, Lee, a 40-year-old homemaker, asked her husband how much they had earned from stocks this year. He left the room without answering. This anecdote highlights the growing frustration among individual investors in South Korea as the stock market enters a new era, but many still struggle to see meaningful gains.

The Korean stock market has entered the KOSPI 3,800 era, a level never before experienced. However, the so-called “capital K” market trend—where only some large-cap stocks rise while the rest remain sluggish—continues to challenge many investors. When portfolios underperform, reviewing expert strategies and reorganizing investments can be crucial.

Five asset management firms that achieved outstanding results this year were asked to select their top-performing stocks, akin to soccer coaches picking their best players. Amid the liquidity-driven market, we heard detailed insights on which stocks to deploy in the four positions: forwards, midfielders, defenders, and goalkeepers.

The J Team: Strong Forwards and Solid Defense Combination

The J Asset Management, with assets under management exceeding 5.5 trillion Korean won, is led by CEO Choi Kwang-wook, a former star fund manager. Choi said, “The current market is dominated by large-cap stocks, but individual investors are heavily weighted toward small and mid-cap individual stocks, leading to their exclusion.” He proposed maintaining a solid defensive line while deploying four forwards to boost scoring power.

The forwards include SK Hynix and Samsung Electronics, expected to benefit from the AI-driven semiconductor supercycle; Hyosung Heavy Industries, anticipated to see structural growth due to power infrastructure expansion; and Korea Financial Holdings, a beneficiary of the new government’s market support policies.

The defenders are Naver, Kia, Hyundai Motor2우B, and CJ. Naver has a robust business model and is expected to improve profitability through AI technology. CJ leads the domestic consumer industry, centered on Olive Young. Notably, the inclusion of two automotive stocks stands out. Choi explained, “Kia and Hyundai Motor2우B are undervalued high-dividend value stocks with strong shareholder return potential.” The goalkeeper position is occupied by KT, a representative high-dividend defensive stock.

Renaissance Team: Scoring with Semiconductors, Defense with Shipbuilding, Defense, and Nuclear

Lee Geon-kyu, CEO of Renaissance Asset Management and a veteran fund manager with 24 years of experience, has seen a surge in individual investor funds this year due to consistent performance. He selected SK Hynix as the top forward, stating, “Despite concerns about latecomers entering the market, demand from big tech companies is growing faster than expected, leading to results that will exceed expectations.” The remaining three forwards—Comico, Iotech, and PSK—are semiconductor equipment-related stocks.

The midfielders include Simtec, TLB, and Isupetasis, expected to benefit from increased demand for server substrates. The defenders are Hanwha Ocean (shipbuilding), Hyundai Rotem (defense), and Doosan Enerbility (nuclear), collectively known as the “shipbuilding, defense, and nuclear” stocks. These have solid track records due to existing orders and remaining expectations for new contracts, reducing the risk of “earnings shocks.” Lee noted, “While they may appear weak in an IT-driven market, patient investors will ultimately prevail.”

The goalkeeper position is held by LS Electric and Hyosung Heavy Industries, both in the power equipment sector. Although their stock prices have risen significantly, their stability remains high due to unresolved power shortages. Samsung SDI, which could see reflected benefits from increased tariffs on Chinese batteries but remains constrained by political variables, was named as a starting candidate waiting on the bench.

Blash Team: Semiconductor Core, Enhanced Attack Power with Entertainment and Biotech

Baek Ji-yoon, CEO of Blash Asset Management, has achieved a return rate nearing 100% this year through persistent trading in Korean stocks for over 20 years. She positioned Samsung Electronics and SK Hynix as forwards responsible for the team’s scoring. Baek stated, “In the past 30 years of interest rate cuts, the semiconductor sector has never faltered.”

The midfielders include Nomad, Park Systems, Oreum Therapeutics, and Haeseong DS. Nomad, a performance platform company, is expected to see overseas sales growth, particularly in China. Park Systems is anticipated to benefit from global semiconductor companies’ equipment investments. Oreum Therapeutics, a biotech firm, is developing new drugs based on targeted protein degradation (TPD) technology to overcome the limitations of existing antibody-drug conjugates (ADCs). Haeseong DS, a mid-sized company producing DDR5 package substrates for servers, is expected to enter a full-fledged turnaround phase as order volumes surge.

The defenders include KD Navien, targeting the North American market; HYBE, gaining momentum from BTS’s full group comeback; d’Alba Global, undervalued despite high growth; and Samsung Electro-Mechanics, expected to see improved performance due to server MLCCs. The goalkeeper position is occupied by Hanwha, an undervalued holding company.

V Team: Winning with Stamina, Technology, and Fan Support

“Just as stamina, technology, and fan support are all crucial in soccer, stocks must also balance these three elements,” said Park Jin-hwan, CEO of V Asset Management, a seasoned veteran who has weathered market storms like the IT bubble and the Lehman Shock.

He emphasized, “The current KOSPI’s price-to-earnings ratio (PER) is 11x, higher than the historical average of 9–10x. Like a game under intense pressure from the opposing team, the current market makes building momentum difficult, so stock selection is more critical than ever.”

Park proposed a 4-3-3 formation with four forwards, three midfielders, and three defenders. Samsung Electronics, accounting for 21% of the portfolio, had the highest allocation.

The forwards include Samsung Electronics, riding the semiconductor supercycle; Hanmi Pharmaceutical, with a rich lineup of obesity drug developments; Hyundai Heavy Industries, a key player in MASGA (Korea-Japan shipbuilding cooperation); and Hyundai Rotem, a leading K-defense stock.

The midfielders include Korea Electric Power, expected to see a performance turnaround; Hyosung Heavy Industries, with robust power equipment demand; and Korea Financial Holdings, a darling of the investment era.

The defenders include Paradise, expected to benefit from foreign tourists; Naver, poised to lead the stablecoin market; and Doosan Enerbility, a leader in nuclear SMRs. The goalkeeper position is held by KB Financial, noted for its strong dividend policy.

W Team: Securing Stability with Big 3 Financial Holdings

Noh Hyun-bok, deputy CEO of W Asset Management, explained, “The Korean stock market should be divided into before and after the amendment of the Commercial Act, which strengthened protection for minority shareholders. This has resolved long-standing ‘Korea discount’ issues that foreign investors had previously avoided.”

He noted that the dividend payout ratio (dividends paid as a percentage of net income) for listed companies, which was around 19% in the past, has risen to 34% this year. Additionally, corporate spin-offs, which occurred over 300 times since 2010 for companies like LG Chem and LG Energy Solution, have been effectively restricted.

Noh added, “While foreign investment in the KOSPI has fluctuated between 30–38% over the past decade, it remains at 33% despite recent foreign buying. Although U.S.-China tariff conflicts require caution as a short-term variable, Korean companies may benefit from reflected gains as Chinese firms’ price competitiveness declines.”

The defenders include the Big 3 financial holdings companies: KB Financial, Hana Financial, and Woori Financial. With a total shareholder return (dividends + share buybacks and cancellations) already reaching 7%, these stocks can withstand market volatility. Noh added that policy changes regarding separate taxation at year-end could further boost their prospects.