Goldman Sachs Cuts South Korea KOSPI 12-Month Target by 25%
nashnova research
Goldman Sachs slashed its KOSPI target from 12,000 to 9,000 — a 25% cut — yet still sees over 60% upside from current levels, calling the market's pessimism overdone.
Why did Goldman cut the target so sharply?
The trigger: a reversal in the AI trade sparked broad selling. KOSPI has fallen more than 35% from its June high.
This means → Korea's market went from one of the year's hottest globally to one of the cheapest in the world.
Goldman strategist Timothy Moe wrote on October 25 that the cut incorporates "more conservative market-pricing assumptions," but the team still sees attractive risk-reward at current levels.
How cheap is KOSPI right now?
The 12-month forward P/E — a valuation multiple based on expected earnings over the next year — has dropped to roughly 4×, the lowest among 18 major markets since 2006.
In plain terms = Korea's entire stock market is valued at about half of Indonesia's — a major economy priced like a small emerging market.
Goldman says the market "is pricing an excessively pessimistic fundamental outlook." Its revised target still implies over 60% upside from here.
Why are chip stocks the core pressure point?
Samsung Electronics and SK Hynix make KOSPI a barometer for the AI trade — when AI sentiment rises, KOSPI rises; when it fades, KOSPI falls.
Investors are questioning the sustainability of massive AI-infrastructure capex, while financing costs climb and return signals remain weak. The sell-off spread from tech to the broader market.
Goldman estimates current semiconductor valuations imply a 65% earnings decline for the sector by 2027 — a scenario the bank considers too pessimistic.
What about sectors beyond chips?
Non-memory sectors account for roughly half the index by weight and trade at 7.6× forward P/E.
This means → it is not just chip stocks being sold off; the entire Korean market has been dragged into deep-value territory by AI-retreat sentiment.
This reflects a panic that has spread from "AI might be overheating" to "Korea's fundamentals are broken" — Goldman believes that pricing has gone too far.
Where does Goldman still see opportunity in Korea?
Goldman maintains its preference for stocks tied to power, industrials, corporate-governance reform, and companies benefiting from domestic demand recovery and the Korean Wave.
In plain terms = Goldman's call is that chip pessimism has been over-extrapolated to the entire market, and structural opportunities in non-chip sectors remain intact.
The key variable is whether the AI capex outlook can regain market confidence — that determines whether extreme-low valuations are a "value trap" or a "window to buy cheap."
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