Goldman Sachs Sticks to KOSPI Target Amid Market Volatility

Despite the KOSPI's recent decline, Goldman Sachs remains bullish on the Korean stock market. The firm maintains its 12-month target of 12,000 for the index, implying a potential 92% upside from current levels.

The KOSPI surged 116% since the start of the year to reach a record high of 9,114.55 on June 22, but subsequently fell 39% to its low on July 30. The firm attributes this decline to concerns over the sustainability of the semiconductor memory cycle and technical factors such as selling of leveraged ETFs and short-term momentum-following investors.

However, Goldman Sachs sees a strong memory sector as the core basis for its positive view. The firm believes that accelerating computing demand and a severe supply shortage will lead to a stronger and longer-lasting memory cycle than previous ones.

The firm also highlighted the appeal of the non-memory sector, which accounts for about 40% to 50% of market capitalization. Earnings are projected to grow 71% and 20% in 2026 and 2027 respectively, valuations are low both in absolute terms and relative to historical ranges, and corporate governance reform continues to make progress.