Goldman Sachs raises KOSPI target to 8,000 points... optimistic about South Korean stock market rally

Goldman Sachs has raised the 12-month target level of the Korea Composite Stock Price Index (KOSPI) to 8,000 points, once again focusing market attention on the further upside potential of the Korean stock market. The underlying reasoning is that the earnings outlook for semiconductor-centered companies is improving, and current stock prices are still undervalued relative to company value.

On the 18th local time, Timothy Mo, Chief Equity Strategist for Asia-Pacific at Goldman Sachs, reported that the KOSPI target level has been raised from the original 7,000 points to 8,000. He diagnosed that the overall fundamental strength of Korea’s semiconductor and industrial materials sectors is continuously improving. This adjustment reflects expectations that earnings forecasts for 2026 will increase by 220%. An upward revision of target indices in the securities industry is usually interpreted as a sign that confidence in individual stock performance and overall market investment sentiment has further strengthened compared to before.

Goldman Sachs specifically pointed out that valuation pressure on the Korean stock market is not yet significant. The expected P/E ratio of the KOSPI is about 7.5 times, meaning current prices are relatively low compared to future expected earnings. Considering that the median P/E ratio during past market peaks was 10 times, if corporate earnings actually grow, there is still room for stock prices to be re-rated upward. Additionally, the report also analyzed that although expanding demand for AI-related semiconductors is boosting earnings expectations, the Korean stock market remains at a discount compared to global markets or major Asian markets.

Corporate governance reforms and shareholder return policies are also seen as factors driving a revaluation of the Korean stock market. Goldman Sachs believes that current stock prices have not fully reflected these changes. Corporate governance reform refers to institutional changes aimed at increasing operational transparency and strengthening the rights of common shareholders, while shareholder returns refer to policies where companies return profits to shareholders through increased dividends or share buybacks and cancellations. However, Goldman Sachs considers that these changes are still progressing gradually, and companies’ responses have not yet fully met investor expectations; their full effects may become more apparent later.

Capital flows are also gradually improving. Goldman Sachs explained that since a large-scale withdrawal of foreign capital from semiconductor stocks at the end of January, recent capital inflows have begun to recover. Foreign investment is one of the core variables influencing the direction of the Korean stock index. If earnings improvement, valuation perceptions, and supply-demand recovery work together, the market’s upside potential could increase. Such trends may continue in the future, with their trajectory depending on the semiconductor industry’s cyclical outlook, companies’ actual shareholder return implementation, and the pace of governance reforms.