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Korea Investment & Securities: KOSDAQ Rebound Hinges on Lower Interest Rates
Finance · Investment Banks/Brokers · yonhap_finance · 2026-08-26
Korea Investment & Securities suggests that while KOSDAQ valuations are attractive, a meaningful rally requires a downward trend in bond yields.
What Happened
Valuation Assessment: Korea Investment & Securities reports that KOSDAQ's trailing 12-month net profit has reached its highest level since Q4 2020. Furthermore, the index's P/E ratio is currently at its lowest point since December 2020, suggesting an attractive entry point for investors.
Interest Rate Headwinds: Analyst Yeom Dong-chan notes that because the KOSDAQ index is heavily weighted toward growth stocks, the recent rise in market interest rates acts as a significant burden. Growth stocks are particularly sensitive to rate fluctuations, making the current high-rate environment a major obstacle for the index.
Historical Correlation: An analysis of the past 20 years shows that KOSDAQ performance is generally strong when the 3-year government bond yield remains below 3%. Even when rates are in the 3-4% range, the index has historically shown strength during periods when yields were trending downward.
Key Rebound Condition: The report concludes that both the absolute level and the direction of interest rates are critical for the KOSDAQ. A decline in the 3-year government bond yield, currently in the high 3% range, is identified as a necessary condition for any meaningful market rally.