Bloomberg: South Korean stock market becomes the first trillion-dollar market to fall below a 5x price-to-earnings ratio.

BlockBeats news, October 23, according to Bloomberg data, South Korea's KOSPI index's forward 12-month price-to-earnings ratio has fallen to 4.2 times, becoming the first trillion-dollar market on record to drop below the 5 times threshold. Among the 18 markets with a market capitalization exceeding $1 trillion at the beginning of this year, no benchmark stock index had previously experienced this situation.

The cooling of the AI boom triggered a selloff in tech stocks, putting pressure on the South Korean stock market. Although South Korea's exports are heading toward $1 trillion, and demand for SK Hynix and Samsung Electronics chips remains strong, investors are still unwilling to pay higher valuations for the earnings of related companies. The valuation level of the South Korean stock market has approached that of the Indonesian market, which is facing the risk of an MSCI downgrade, and the discount has further widened.

Bloomberg commentary believes that the extremely low valuation of the South Korean stock market may create room for future valuation repair. If market sentiment turns, South Korean stocks are expected to outperform other markets for a period. However, when the valuation repair will begin and whether the stock market will continue to fall further are currently uncertain. A low price-to-earnings ratio itself does not mean the market has already bottomed.