Goldman Sachs Sees 12,000 Target for KOSPI Despite Recent Plunge

Goldman Sachs has analyzed the sharp drop in KOSPI as a correction within a long-term bull market. The global investment bank said that despite the recent plunge, the memory chip cycle and domestic corporations' earnings growth remain solid. According to Goldman Sachs, there is about 90% additional upside potential compared to the current index.

The report, published on August 4 by Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs, assessed that the recent speed and scale of the decline are similar to those during the COVID-19 spread, the 2011 correction, and the post-2021 tech boom downturn. The biggest cause of the plunge is concerned about the sustainability of the memory cycle.

Goldman Sachs expects memory makers to maintain strong pricing power and profitability due to rapidly rising computing demand and supply shortages that may last through 2030. Moe explained, 'The market is concerned about the memory cycle, hyperscalers' capital expenditures (CapEx), capital market fundraising, and intensifying competition, but these factors are not enough to derail the long-term boom scenario.'

The report also assessed that excessive market leverage has been largely unwound. Assets under management in leveraged ETFs and margin trading have fallen, and tighter regulation and reduced exposure at hedge funds have made investor positioning healthier than before.