Goldman Sticks to Bullish Call as Korean Market Swings Continue
South Korea's stock market has been experiencing wild swings after a rapid AI-fueled rally turned into a sharp correction. Goldman Sachs is doubling down on its bullish call for Korean equities, despite weeks of turbulent market activity.
The bank maintains its 12-month target for the Kospi index at 12,000, which implies around 80% upside from current levels. This target is based largely on the outlook for memory chips, as Goldman's analysts believe that accelerating demand for AI computing and severe memory shortages will support chip prices and profits for an extended period.
The recent sell-off in Korean stocks has been driven by concerns over Big Tech's capital spending, its ability to finance investment, and intensifying competition. However, Goldman's analysts argue that these concerns do not overturn their view that the current AI-hardware cycle will be unusually large and long.
Goldman notes that market positioning is now 'much cleaner' after retail investors reduced borrowed positions, regulators tightened rules on leveraged products, and hedge funds cut their exposure. The bank expects the market to stabilize and resume its upward trend as positioning clears and newsflow corroborates the earnings outlook.