Goldman Sachs Lowers 12-Month Target Points for South Korea's Kospi Index

Goldman Sachs has revised down its 12-month target points for South Korea's Kospi index from 12,000 to 9,000, citing growing concerns over artificial intelligence investments and accelerating sell-offs in technology stocks.

Timothy Moe and Goldman Sachs strategists stated that the sell-off in the Kospi index, which has lost more than 35 percent of its value since its peak in June, has been excessive. Despite more cautious valuation assumptions, the bank projects that the index holds an upside potential of over 60 percent from its current levels.

Serving as a key indicator of AI spending due to the heavy weight of chip manufacturers like Samsung Electronics and SK Hynix, the Kospi has been negatively impacted by uncertainties over whether high costs in the sector will yield sufficient returns. Analysts evaluated that current semiconductor valuations reflect the assumption of a 65 percent drop in 2027 earnings, and that this scenario is overly pessimistic.

Assessment: Despite lowering its target price, Goldman Sachs argues that South Korean equities rank among the cheapest markets in the world in terms of valuation. The bank continues to see opportunities in energy, industrials, corporate governance reforms, and companies that can benefit from a revival in domestic demand.