Global investment bank Goldman Sachs analyzed the Korean stock market as an "earnings-driven market," saying that "despite the short-term surge from the early-year rally, investment appeal remains high." Previously, Goldman Sachs set a 12-month target of 5,700 points for the KOSPI.
In a report released on the 29th, Goldman Sachs assessed that "the KOSPI's strong rally, up 21% from the start of the year, is an earnings-driven market rather than a simple valuation re-rating." Pointing to the fact that the Korean market's return on equity (ROE) remains above 16%, Goldman Sachs said earnings momentum is still strong.
It identified semiconductors as the key driver of the uptrend. Goldman Sachs said, "Expanded capital expenditures (CAPEX) by hyperscalers are creating supply-demand imbalances in the DRAM and NAND flash markets," and added, "The supply shortage versus demand is likely to persist, which will affect memory pricing." In addition, strong industrial demand, confirmed by rising copper prices, was cited as a factor supporting upward revisions to earnings estimates.
Valuation burdens are also seen as limited. Goldman Sachs said, "Even after this rally, the KOSPI's 12-month forward price-earnings ratio (PER) remains at the historical median range," and noted, "The Korea discount versus the MSCI AC World also persists."
It also said the flow-of-funds environment has turned positive. Goldman Sachs said, "Foreign investors who dumped Korean stocks in 2025 have turned net buyers this year, already recouping about half of the outflows from the fourth quarter of last year." In particular, citing the fact that a majority of respondents in the Goldman Sachs Global Strategy Conference survey picked Korea as the most promising emerging market for future performance, it projected, "Korea will be the second-largest destination for foreign fund inflows among emerging markets in 2026."
Domestic investor flows are also supporting the market, it said. Domestic institutional investors continue to be net buyers of Korean stocks, and inflows into EWY (MSCI Korea NTR USD), a Korea-focused ETF listed overseas, have been rising rapidly since the start of the year, it said.
Risk appetite conditions also remain favorable. Goldman Sachs noted, "Inflows of hedge fund and active capital into Asia are expanding, and Korea is among the markets with large net purchases." It added, "While risk appetite indicators have improved from their lows, they are not excessively stretched." This is interpreted to mean that inflows could continue.