Bloomberg: South Korea’s stock market becomes the first trillion-dollar market to see its price-to-earnings ratio fall below 5.

According to Bloomberg data, South Korea’s KOSPI index has seen its 12-month forward price-to-earnings ratio drop to 4.2 times, becoming the first trillion-dollar market on record to fall below the 5x threshold. Among the 18 markets that had a market capitalization exceeding $1 trillion at the start of this year, no benchmark index had previously recorded such a situation. The cooling AI boom has triggered a sell-off in tech stocks, weighing on South Korea’s stock market. Although South Korea’s exports are approaching the $1 trillion mark, and chip demand for SK Hynix and Samsung Electronics remains strong, investors are still unwilling to pay higher valuations for the earnings of related companies. South Korea’s stock market valuation is now close to that of Indonesia, which faces the risk of MSCI downgrade, with the discount widening further. Bloomberg notes that South Korea’s extremely low stock market valuation may create room for future valuation recovery; if market sentiment shifts, South Korean stocks are expected to outperform other markets in the short term. However, there is uncertainty over when the valuation recovery will start and whether the stock market will fall further, and a low P/E ratio in itself does not mean the market has bottomed out.