Goldman Sachs Cuts KOSPI Target to 9,000, Still Seeing Over 60% Upside

Goldman Sachs has adjusted its 12-month target for South Korea's KOSPI index downwards, from 12,000 to 9,000, amid growing concerns about AI infrastructure investments and the recent market decline. The bank's strategists, including Timothy Moe, cited the KOSPI's 35% drop from its June high as a key factor in the revision. Despite the reduction, Goldman Sachs maintains that South Korean equities remain undervalued, estimating more than 60% upside potential from the current level.

The KOSPI's forward price-to-earnings ratio has fallen to around four times earnings, a historically low level since 2006. Semiconductor valuations also suggest a potential 65% decline in 2027 earnings, indicating an overly pessimistic outlook. The market's weakness is driven by concerns over AI investment profitability, affecting major semiconductor stocks like Samsung Electronics and SK hynix.

Despite the overall index target cut, Goldman Sachs remains bullish on certain sectors such as power-related stocks, industrials, and companies benefiting from corporate governance improvements. The bank also sees potential opportunities in beneficiaries of a domestic economic recovery and the global popularity of Korean culture.