Moe Sticks Firmly to 12,000 Kospi Target Amid Strong Earnings Expectations

Goldman Sachs Group Inc.'s strategist Timothy Moe remains optimistic about the Korean market, sticking to his target of 12,000 for the Kospi index. This prediction is based on his expectation that Korean companies will deliver strong earnings growth, with profits surging by nearly 360% this year and settling at around 35% in 2027.

Moe's argument is straightforward: he values the Kospi index at 7.5 times forward earnings, which is significantly lower than its seven-year average of 14x. Currently, the index is trading at around 5.3x, implying that it has room for growth.

The key driver behind Moe's prediction is the anticipated AI buildout in the tech industry. He notes that US Big Tech companies are expected to spend over $1.2 trillion next year on capital outlays, with a significant portion going towards memory and storage chips. This demand surge will likely lead to higher prices for these components.