Goldman Sachs Cuts KOSPI Target by 25%... "Excessive Pessimism, Still Attractive"

More conservative outlook after a 35% plunge from the peak

Global investment bank Goldman Sachs cut its 12-month KOSPI target from 12,000 to 9,000, a reduction of 25%.

The domestic stock market is displayed on an electronic board in the dealing room at Hana Bank in Jung-gu, Seoul, on Oct. 23, 2026, as the KOSPI fell more than 3% early in the session, breaking below the 5,400 level. Photo by Kang Jinhyeong

According to Bloomberg, Goldman Sachs strategists including Timothy Moe said in a report on Sunday that they had adopted more conservative valuation assumptions after the KOSPI plunged more than 35% from its June peak.

Despite lowering their target, the strategists remained optimistic about the potential for a rebound in South Korean stocks. “The market is pricing in an overly negative fundamental outlook,” they said, adding that the recent plunge had left South Korean stocks significantly undervalued.

They added, “We lowered our target to reflect more conservative assumptions about how the market assesses companies’ underlying strength, but South Korean equities remain attractive in terms of risk-adjusted returns.”

They said the revised target still implies more than 60% upside from current levels.

Goldman Sachs had repeatedly raised its KOSPI target this year, taking it to 12,000 in June, and had maintained that target even amid a global selloff in artificial intelligence (AI)-related stocks. However, doubts about returns on AI infrastructure investment and rising financing costs hit major semiconductor stocks such as Samsung Electronics and SK hynix particularly hard, with the fallout spreading across the broader market.

Bloomberg said South Korea’s stock market, which had been the world’s hottest major market this year, had plunged and become the cheapest market in the world. The KOSPI’s price-to-earnings ratio (PER), which measures stock prices against expected earnings over the next 12 months, fell to about 4 times. That was the lowest level among the 18 markets tracked by Bloomberg since 2006.

Goldman Sachs said current semiconductor stock prices already reflect excessive pessimism that earnings will fall 65% in 2027. Stocks outside the memory chip sector account for about half of the KOSPI, and their forward PER is only around 7.6 times.

Meanwhile, despite lowering its target, Goldman Sachs maintained a positive investment outlook on power and industrial stocks, companies related to corporate governance improvements, and businesses expected to benefit from a recovery in domestic demand and the growing global popularity of South Korean culture.

This content was produced with the assistance of AI translation services.