South Korean stocks surged nearly 2% on Wednesday, with the Kospi gaining 100.16 points or 1.44% to 7,054.68, reaching its highest intraday level since August 18 and extending its winning streak to a fifth consecutive session. According to The Economic Times, the benchmark index was driven by semiconductor gains as investor appetite for artificial intelligence-related stocks remained strong. Chipmaker Samsung Electronics advanced 1.39%, while SK Hynix jumped 3.46%, tracking gains in US semiconductor stocks as the Philadelphia Semiconductor Index rose 1.3% in overnight trading. Of the 909 stocks traded, 405 advanced and 448 declined, while foreign investors were net sellers of South Korean shares worth 174.3 billion won ($130.2 million). The South Korean won strengthened 7.5% against the dollar so far this year, supporting the broader market rally.
Goldman Sachs Group Inc. strategist Timothy Moe continues to stand by his bullish target for South Korean stocks, maintaining his 12,000 target for the benchmark Kospi despite recent market volatility. According to reports from CNBC TV18, this target implies an upside of nearly 80% from current levels, with Moe stating the optimism is driven by expected earnings delivery. The investment bank's chief Asia Pacific equity strategist believes the market is underpricing the duration of the current earning cycle. "We're still holding to it — it's driven by what we think will be earnings delivery," Moe said in an interview Friday, as reported by NDTV Profit. His estimate, which was set three months ago, was one of the most bullish targets on the street when initially announced. The KOSPI would need to climb roughly 74% to reach Goldman's 12,000 target, as reported by BeInCrypto.
According to Goldman Sachs analysis, the global race to build data centers has created massive shortages of memory and storage chips, significantly lifting their prices. US Big Tech spending is estimated to top $1.2 trillion next year, up sharply from prior forecasts of $800 billion. Moe explains that hyperscalers must continue spending even if they don't make money, as compute demand remains very memory-intensive, benefiting advanced memory chipmakers. The latest developments show Nvidia expected to post a jump of about 80% in quarterly revenue to $79.12 billion and an increase of about 120% in adjusted profit to $1.77 per share, according to estimates from Fiscal.ai. "The hyperscalers 'have to continue to spend even if they don't make money,'" Moe said, as reported by NDTV Profit. "It's great for memory because it's going to drive compute demand, which is very memory intensive."
The bond market showed positive momentum with Korean government bond yields edging lower, as reported by The Economic Times. The yield on the most liquid three-year Korean Treasury bond fell 0.4 basis points to 3.899%, while the benchmark 10-year yield declined 1.1 basis points to 4.379%. Other major stocks also traded higher, with LG Energy Solution gaining 0.29%, Hyundai Motor and Kia rising 0.26% and 0.48% respectively, while POSCO Holdings slipped 0.15% and Samsung BioLogics edged up 0.03%. The South Korean won strengthened against the US dollar, with the currency appreciating 7.5% against the dollar so far this year, supporting the broader market rally and contributing to the KOSPI's impressive 67.40% gain so far this year.
As reported by Goldman Sachs, the strategist estimates earnings growth of roughly 360% this year for Kospi members, moderating to about 35% in 2027. Moe acknowledges that the fact that profits will eventually slow down is well-understood by the market. His 12,000 Kospi estimate is based on 7.5 times forward earnings estimates, while the index currently trades at 5.3 times, roughly half its seven-year average. If Korean companies achieve his earnings projections, Moe believes his 12,000 Kospi estimate 'isn't as crazy as it might appear.' However, delivery remains the sticking point, as Samsung and SK Hynix have posted strong quarters this year with little market reward, so the next results will test whether earnings alone can close the 74% gap. The strategist emphasizes that the current market pessimism may be misplaced, as the AI boom's duration for Korean chipmakers remains underestimated by investors.
