Goldman slashes Kospi target to 9,000 but still sees over 60% upside
Goldman Sachs has slashed its 12-month target for South Korea’s benchmark Kospi index to 9,000 from 12,000, citing heightened market volatility and slowing earnings momentum. Despite the sharp cut, the firm maintained its overweight stance on Korean equities, as the revised target still implies more than 60% upside from current levels, according to strategists led by Timothy Moe in a report Sunday. The Kospi has fallen 40% from record highs and its price-to-earnings ratio is around four times, roughly three standard deviations below its historical average, Goldman said. Korean equities appear overly discounted relative to their underlying fundamentals, despite heightened market volatility and slowing earnings momentum. In particular, valuations in South Korea’s memory chip sector imply a roughly 65% decline in 2027 earnings, reflecting concerns over the sustainability of earnings in the sector. Goldman also highlighted opportunities beyond memory chips, estimating that non-memory stocks, which account for roughly half the index, remain more than 30% undervalued. The bank favors power, industrials, corporate governance reform beneficiaries, sectors benefiting from reflation, K-culture and risk reversal strategies. The downgrade comes amid a broader sell-off in Asian technology stocks, driven by concerns over the sustainability of AI spending, rising oil prices and increasingly hawkish central banks, according to Goldman. Foreign investors, particularly hedge funds, have continued to sell Korean and Taiwanese equities, with South Korea recording $1 billion in foreign outflows, the bank said.
