Global investment bank Goldman Sachs has strengthened its optimistic outlook for the South Korean stock market. The firm has raised its KOSPI target to 12,000, citing expected performance improvements driven by artificial intelligence (AI) semiconductors.
On June 3, Reuters reported that Goldman Sachs, in a recent report, maintained a positive view on the South Korean market and increased its 12-month KOSPI target from 9,000 to 12,000. This adjustment suggests a potential upside of approximately 36% from the current index level.
Goldman Sachs particularly highlighted the stock markets in South Korea and Taiwan. The demand for AI semiconductors is expected to significantly boost corporate profits, with companies showing strong performance growth receiving high valuations in the market.
Timothy Moe, Goldman Sachs' Asia-Pacific equity strategist, stated, "Companies demonstrating profit growth are being rewarded by the market."
The semiconductor sector is identified as a key driver of the South Korean stock market's strength. With the AI semiconductor supply chain centered around Samsung Electronics and SK Hynix, South Korea is leading the rally in Asia. According to Goldman Sachs, the MSCI Asia-Pacific index (excluding Japan) has risen 27% this year, but would have declined by 4% without the contributions from South Korea and Taiwan.
Goldman Sachs also positively assessed the South Korean market's relative resilience to energy price shocks resulting from the Iran conflict. In contrast, some South Asian countries, which are heavily reliant on energy imports, are seen as more vulnerable to rising oil prices.
However, the firm issued a warning regarding the potential overheating of the stock market. The recent surge in leveraged ETF funds indicates an increase in speculative demand, and the upward trend is concentrated in certain AI and semiconductor stocks, raising the likelihood of short-term corrections. Goldman Sachs noted, "While the AI semiconductor rally may continue, the risk of a pullback is also increasing."
* This article has been translated by AI.
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