‘12,000→9,000’ Goldman Sachs cuts KOSPI target by 25% ... “Sticks to view that Korean stocks are undervalued”

[Financial News] Investment bank Goldman Sachs cut its 12-month target for the KOSPI from 12,000 to 9,000, a 25% reduction. However, it maintained its view that the Korean stock market is significantly undervalued.

According to global financial data platform Investing.com on the 25th (local time), Goldman Sachs strategists, including Timothy Moe, lowered their target after the KOSPI plunged more than 35% from its June peak. Goldman Sachs had raised its target in June and maintained its bullish outlook even after tech stocks began to slide.
However, they said, “The market is pricing an excessively negative outlook for fundamentals into stock prices,” and concluded that the recent sharp drop had left Korean stocks significantly undervalued. They added, “We lowered our target index to reflect more conservative assumptions about how the market assesses companies’ fundamentals, but Korean stocks remain attractive in terms of risk and return.”

Goldman Sachs said that even its revised-down target index implies at least 60% upside from current levels. This supports its view that Korean stocks are significantly undervalued. According to Goldman Sachs, the KOSPI’s 12-month forward price-to-earnings (P/E) ratio is about 4x, a level not seen across 18 major markets since 2006.
Goldman Sachs raised its KOSPI target several times this year, taking it to 12,000 in June, and maintained it even as a global sell-off in AI-related stocks spread afterward.
However, the KOSPI, which has a heavy weighting in semiconductor companies such as Samsung Electronics and SK hynix, suffered a sharp sell-off amid massive investment in AI infrastructure, rising financing costs and growing doubts about returns on investment.
Goldman Sachs said the current share prices of semiconductor companies already reflect even a forecast that earnings will fall 65% in 2027, and judged that the market was overly pessimistic. It added that stocks outside the memory semiconductor sector account for about half of the KOSPI, yet their forward P/E ratio is also just 7.6x.
While lowering its target index, Goldman Sachs maintained a positive outlook, saying it continued to favor investment opportunities in power and industrials, stocks related to corporate governance improvements, and companies benefiting from a recovery in domestic demand and the growing reach of Korean popular culture.
[email protected] Kim Hee-sun Reporter