Goldman Sachs announced that its strategists, led by Timothy Moe, have reduced the 12‑month target for South Korea’s Kospi Index by 25%, moving the forecast down to 9,000 points from the previous 12,000. The revision comes after the benchmark fell more than 35% from its June peak, but the bank notes that the new level still suggests an upside of over 60% relative to the index’s current trading range.
The downgrade is attributed to mounting concerns over artificial‑intelligence‑related investments and a broader sell‑off in Korean equities, especially those with heavy exposure to semiconductor manufacturers Samsung Electronics (KRX:005930) and SK Hynix (KRX:000660). While these firms have benefited from memory‑chip demand for AI infrastructure, Goldman highlights rising financing costs, massive infrastructure spending and uncertain return prospects as factors driving the sell‑off.
Goldman points out that the Kospi’s 12‑month forward price‑to‑earnings ratio has slipped to approximately four, a valuation level not observed across 18 major markets since 2006. Korean stocks now trade at roughly half the valuation multiples of Indonesian equities. The bank’s internal estimates suggest that current semiconductor valuations imply a 65% decline in sector earnings by 2027, a scenario it deems overly pessimistic. By contrast, companies outside the memory‑chip segment, which represent about half of the Kospi, are trading at 7.6 times forward earnings.
Despite the lower overall market target, Goldman Sachs continues to favour opportunities in power, industrials, corporate‑governance‑related stocks and firms that stand to benefit from the domestic economic recovery and the global popularity of Korean popular culture.