Goldman Sachs has cut its 12-month target for the Kospi Index by 25 percent, lowering it to 9,000 from 12,000 previously. Even so, the bank’s strategists still see upside of more than 60 percent from current levels.
AI worries behind the cut
The revision reflects concerns over the scale of artificial intelligence investment and a more conservative approach to equity valuations. Goldman had actually raised its Kospi target in June, staying bullish even as global tech stocks sold off over worries about AI spending.
Since then the Kospi has fallen more than 35 percent from its June peak. The index now trades at roughly 4 times forward earnings, a level Goldman compares against 18 major markets going back to 2006.
Chip sector valuations questioned
Korea’s stock market is heavily concentrated in memory chipmakers Samsung Electronics and SK Hynix, leaving it exposed to swings in chip sentiment.
Non-memory stocks, which make up about half the index, trade under 8 times forward earnings. Korean equities overall trade at roughly half the valuation of Indonesian stocks, Goldman noted.
The bank’s preferred themes going forward include power, industrials, corporate governance reform, domestic recovery and Korean popular culture.
Source: Goldman Sachs
