Kospi target increased to 12,000 by Goldman Sachs amid earnings boom, memory chip cycle

Workers at Hana Bank in Jung District, central Seoul, celebrate the benchmark KOSPI breaching the landmark 8,000 points on May 15. [YONHAP] Goldman Sachs on Wednesday made a bullish lift to its 12-month Kospi target from 9,000 to 12,000, pointing to strong earnings growth and the prospect of a prolonged upcycle in the memory semiconductor sector. The Wall Street bank said in a note that the Kospi has around 37 percent additional upside potential, and that while a short-term correction is possible, the investment appeal remains high. Related Article Kospi opens sharply lower on Wall Street losses, renewed Iran tension Extreme volatility shakes Kospi as chipmaker ETFs spark short-term trading flood Kospi closes at record high above 8,800 points on optimism over AI It maintained its “overweight” stance on the Korean stock market, pointing to expectations of “higher earnings, underpriced memory cycle duration and rerating catalysts.” “Earnings are driving Asian equity returns,” Goldman strategists led by Timothy Moe said, noting that first-quarter profits in the IT sector rose 185 percent, with Korea cited as a standout example. It added that the consensus earnings growth forecast for Kospi-listed companies has been revised up sharply — from 48 percent at the start of the year to 277 percent currently — and that profit outlooks for companies beyond Samsung Electronics and SK hynix are also improving significantly. Goldman Sachs put its earnings growth forecasts for Kospi companies at 320 percent for this year and 35 percent for next. The bank paid particular attention to the pricing power being gained by memory chipmakers as AI demand outpaces supply growth, stating that while the market believes the high profitability of memory companies will not last long, it expects this cycle to last much longer than in the past. Goldman also noted that more than 60 percent of Kospi-listed stocks remain undervalued, and said it holds a positive view on sectors including defense, shipbuilding and power infrastructure. The bank assessed the Kospi’s current forward price-to-earnings ratio at 8.2 times, roughly 20 percent below levels seen at previous market peaks, and set a floor for the index at 7,820. On the risk side, Goldman flagged the heavy concentration of positions in Samsung Electronics and SK hynix, as well as a rise in speculative trading by retail investors through leveraged ETFs. “We acknowledge the market has more than doubled this year, that Samsung Electronics and hynix now account for over half the market cap, that retail speculative activity has increased, and that the market is vulnerable to a correction,” it said. “We suggest downside protection strategies later, but argue the strategy case for Korea remains compelling.” This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom. BY PARK JONG-SUH [lee.jian@joongang.co.kr]