Goldman cuts Kospi 12-month target by 25% as AI trade unravels
The revised forecast of 9,000 still implies a more than 60% upside from current levels
GOLDMAN Sachs strategists slashed their target for South Korea’s Kospi by 25 per cent after raising it repeatedly this year, as concerns over the artificial intelligence trade intensify.
The analysts including Timothy Moe lowered their 12-month target for Korea’s equity gauge to 9,000 from 12,000, citing more conservative valuation assumptions after the benchmark plunged more than 35 per cent from its June peak.
The sell-off has left the equities highly undervalued, according to the strategists, and the revised forecast still implies a more than 60 per cent upside from current levels.
Goldman analysts most recently raised their target for the Kospi in June, and had maintained it at 12,000 even as the index’s stocks slumped in a global AI sell-off that started later that month.
Chip-making giants including Samsung Electronics and SK Hynix have made the Kospi a bellwether for the AI trade.
The exchange has suffered from investors’ growing concern about the sustainability of massive infrastructure spending and rising financing costs in the sector, with little sign of sufficient returns. The selling pressure has spilled into the broader Korean market.
“The market is pricing an overly negative fundamental outlook,” the Goldman strategists wrote in a note on Sunday (Oct 25).
The target was lowered “to incorporate more conservative assumptions about how the market may price underlying fundamentals but still view the market as offering attractive risk-reward at current levels”, they added.
South Korea has transformed from the year’s hottest major market into the world’s cheapest, with valuations falling to roughly half of Indonesia’s.
The Kospi’s 12-month forward price-to-earnings ratio has fallen to about four, a valuation last seen in 2006 across any of the 18 markets, after starting 2026 with a value over US$1 trillion, data compiled by Bloomberg showed.
The Goldman strategists estimated that current semiconductor valuations imply a 65 per cent decline in the sector’s 2027 earnings, a scenario they consider excessively pessimistic.
Stocks outside the memory sector, which account for about half the index, trade at 7.6 times forward earnings.
Despite the latest cut, the bank continues to favour opportunities in power, industrials, corporate governance-related stocks and companies benefiting from domestic reflation and Korean popular culture. BLOOMBERG
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