By Jules Rimmer
Goldman Sachs raises its KOSPI index target from 7,000 to 12,000
Currency dealers celebrating South Korea's benchmark stock index breaking the 6,000 points, back in February. Goldman Sachs says the market could double that.
Back at the start of March with the Iranian crisis raging, the 7,000 target for South Korea's KOSPI index set by Goldman Sachs was looking ambitious.
Fast forward three months, however, that objective has been comfortably exceeded and chief portfolio strategist for Asia, Tim Moe, has now boosted his KOSPI KR:180721 target to 12,000, almost 40% above Wednesday's close of 8,801. His recommendation for the market remains at overweight.
The driving force behind Moe's massive upgrade is the spectacular earnings growth enjoyed by South Korean companies, especially the two heavyweight memory chip makers, Samsung Electronics (KR:005930) and SK Hynix (KR:000660), that between them comprise almost half of the index.
Index gains in Korea and Taiwan are powered by revisions to consensus growth expectations
Their earnings prospects show no signs of slowing and in fact were further enhanced by comments made by Nvidia's (NVDA) chief executive Jensen Huang who was attending a tech conference in Taipei on Tuesday. Huang, whose company buys most of the high-bandwidth memory chips from Samsung and SK Hynix, requested that the latter &#34;Please Make More&#34; while expressing enthusiasm for the product.
This relentless demand has been behind the dramatic earnings revisions, outlined by Moe in a report he and his Asian strategy team published Wednesday. At the start of 2026, consensus earnings per share growth for the South Korean market was a pretty decent 48%. Now that figure is 277%.
Moe is lifting his estimates for 2026 earnings growth to 320% from 300%, and also boosted his 2027 earnings growth view to 35% from 28%. The strength of earnings is such that even if KOSPI were to achieve 12,000, the market would still only be trading on 8 times forward earnings.
Moe points out that since &#34;the demand for compute is growing faster than supply can respond, the market continues to underprice the likely duration of the semiconductor memory cycle.&#34; That South Korea currently commands only 5 times forward earnings suggests the market is skeptical of the longevity of this supply-demand dynamic, Moe contends.
Moe still thinks the market is underestimating how long the supply-demand mismatch in memory chips can persist
The market remains, therefore, Moe argues, undervalued with potential catalysts to rerate further if continued progress is made on Korea's 'Value-Up program,, a government-led initiative to raise governance standards and better protect minority shareholders.
Looking for historical evidence to support his bullish outlook, Moe draws on Korea's experience of dealing with earnings cyclicality in the past and found that the median valuation during market peaks was a price-to-earnings ratio of 10 times, versus the present 8.2 times, and the median valuation during market troughs was 11.4 times. Moe calculates that even if KOSPI were to succumb to a tactical correction, it probably only has downside to around 7,800.
While KOSPI's 127% year-to-date return has been setting the pace for stock markets globally, Taiwan, the other market with significant exposure to the AI theme, has performed extremely well also. Moe assesses 85% of the Taiwanese TWSE TW:Y9999 benchmark is exposed to AI and this explains why he and his team upped their EPS growth forecasts to 48% in 2026 (from 45%) and 30% in 2027 (from 28%). The AI boom has benefited its largest stock, Taiwan Semiconductor Manufacturing Co. (TSM), best of all. As a consequence, Goldman Sachs now has an index target of 51,000 for the TWSE, 12% above present levels and justifying an upgrade in recommendation to overweight.
In pre-market trading Thursday, the most liquid exchange traded fund for Taiwan EWT was indicating a gain of 0.45% while Korea's EWY was suggesting a 0.6% decline.
-Jules Rimmer
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(END) Dow Jones Newswires
06-03-26 0514ET

Goldman Sachs raised its KOSPI target to 12,000, citing a 40% upside driven by surging earnings from Samsung and SK Hynix. Nvidia's demand for memory chips boosted 2026 EPS growth forecasts to 320%. The market remains undervalued at 8x forward earnings. Goldman also upgraded Taiwan's TWSE target to 51,000 due to AI exposure.

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The hottest stock market in the world has doubled this year. Now Goldman Sachs sees another 40% gain from here.