The expected price-to-earnings ratio for South Korea's KOSPI index over the next 12 months has dropped to 4.2 times, making it the first trillion-dollar market to fall below the 5-times threshold. South Korean stocks are under pressure due to a sell-off in tech stocks triggered by a cooling AI boom. Despite a favorable export outlook for South Korea and strong demand from leading chip companies, investors remain reluctant to pay higher valuations for related companies. South Korean stock valuations are now approaching those of the Indonesian market, which faces the risk of an MSCI downgrade, further deepening the discount. The extreme undervaluation of South Korean stocks may create room for subsequent recovery, and if market sentiment shifts, they could outperform other markets in phases. However, the timing of any valuation recovery and whether the stock market will fall further remain uncertain, as a low price-to-earnings ratio does not necessarily indicate that the market has bottomed out.