Goldman Sachs has diagnosed that its positive strategic stance on the South Korean stock market remains valid despite the recent sharp decline in the KOSPI.
It defined the recent downturn not as the beginning of a secular bear market, but as a steep correction within a larger bull market, maintaining its 12-month KOSPI target at 12,000.
Goldman Sachs strategists including Timothy Moe stated in a report released on the 4th (local time) that the market is pricing in a more negative fundamental outlook than justified, and maintained an "overweight" rating.
The target of 12,000 implies additional upside potential of about 92% from current levels.
The KOSPI surged 116% since the beginning of the year to close at an all-time high of 9,114.55 on June 22, before plunging 39% to a low on July 30.
Subsequently, on July 31, it rebounded 18% in a single day, recording the largest daily gain in history.
Goldman Sachs pointed out that the speed and magnitude of this decline are similar to other sharp downturns the market has experienced over the past 20 years, such as the post-2021 tech boom slump and the spread of COVID-19.
As the direct cause of the decline, it cited concerns over the sustainability of the memory semiconductor cycle.
It analyzed that technical factors, such as selling by leveraged exchange-traded funds (ETFs) and short-term momentum-chasing investors, amplified the drop.
The core basis for Goldman Sachs maintaining its positive outlook lies in the memory sector, which accounts for a large portion of market capitalization.
Given accelerating computing demand and a severe supply shortage that could extend through 2030, the assessment is that this memory cycle will be stronger and last longer than previous ones.
It added that strong pricing power and profitability resulting from this are not currently reflected in market prices.
It also evaluated that supply and demand conditions have improved.
It analyzed that the stock market has become much cleaner than before due to a decrease in net assets of leveraged ETFs, a reduction in margin loan exposure, and an easing of hedge fund exposure.
Reported by Kim Jiuk | Video by Seo Byeong-wook | Graphics by Yook Do-hyun | Produced by SBS Digital News
※
Copying, redistribution, and unauthorized use in AI training are strictly prohibited.