As of January 1, 2025, the Korean KOSPI index has a trailing price-to-earnings (P/E) ratio of 11.49 and a forward P/E ratio of 7.85. These ratios are based on the KOSPI index, which serves as the benchmark equity index for the Korean stock market. The year 2023 was challenging for Korean businesses, as many companies experienced a significant decline in earnings due to weakened global demand. In 2024, earnings began to rebound, signaling a recovery in key export-driven industries. Analysts anticipate a strong rebound in earnings throughout 2025; however, the market continues to trade at low multiples, reflecting ongoing investor caution.

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KOSPI Index – P/E Ratio (TTM & Forward) & EPS (TTM & Forward)

* The table presents both trailing and forecasted Earnings Per Share (EPS), with values indexed to a base of 100 as of January 1, 2022. EPS (TTM) reflects the aggregate earnings of the KOSPI index stocks for the past 12 months and is calculated using the net income of the companies. EPS (Forward) is the forecasted (analyst consensus) earnings per share for the next 12 months and is calculated using the estimated operating profit of the companies.

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Earnings Growth of South Korean Companies

South Korean public companies’ earnings remain highly cyclical due to the country’s export-driven economy and reliance on industries sensitive to economic fluctuations.

In 2023, corporate earnings across many sectors experienced a significant decline. A combination of factors—including domestic political uncertainty, global supply chain disruptions, and weak Chinese demand —put downward pressure on earnings. This environment led to lower investor confidence and reduced capital spending across industries.

While several sectors were hit hard, industries heavily reliant on global market conditions, such as petrochemicals and heavy manufacturing, saw marked declines in profitability. Overall, these challenges resulted in a contraction of earnings when compared to previous years. For example, Samsung Electronics’ earning decreased to 39.91 trillion KRW (2023) from 55.65 trillion KRW (2022).

In contrast to the struggles of 2023, 2024 witnessed a strong recovery in corporate earnings. The semiconductor sector played a pivotal role in this turnaround. As global demand for advanced memory chips surged—fueled in part by the growing applications of artificial intelligence—South Korean chipmakers experienced significant improvements. Major players, for example, reported dramatic year-on-year increases in operating profits, reflecting the sector’s robust rebound.

In addition to semiconductors, other sectors benefited from improved market sentiment and relatively low valuations following the sell-offs in the previous year. This broader recovery helped lift overall corporate earnings, with several industries showing renewed growth prospects.

Looking ahead to 2025, analysts remain optimistic about further improvements in corporate earnings. Forecasts suggest that earnings continue to grow, reflecting both the strong performance of technology and semiconductor companies and gradual recovery in other sectors. However, investors have remained very cautious about the Korean stocks and the market is trading at very low multiples at the beginning of the year.