Goldman Sachs cuts Kospi target by 25% as Korean market slumps

what happened

According to Dow Jones Newswires, citing MarketWatch, Goldman Sachs cut its 12-month target for the Kospi index from 12,000 to 9,000 points, a 25% reduction. The note was led by the bank's Asia chief equity strategist, Tim Moe. The index has fallen about 40% since its midsummer peak, yet the bank still sees roughly 60% upside to the revised target.

The Korean market matters for the global AI trade because Samsung Electronics and SK Hynix make up about half of the Kospi and together produce around two-thirds of the world's semiconductors. Moe said the cut reflects more conservative assumptions about how the market will price fundamentals, not weaker earnings. Forced selling by domestic retail investors facing margin calls also contributed to the slump.

why it matters

The decline reflects more than doubts about AI capital spending: a higher equity risk premium is also weighing on valuations. Goldman says the index trades at about four times the next 12 months of earnings, which it calls three standard deviations cheap. Because semiconductors are sensitive to the AI cycle, this dynamic also matters for US technology stocks.

market impact

Semiconductors and Korea: higher risk premium pressures memory chip valuations, with spillover to SOXX and AI-linked US stocks

tags

instruments