Fearless amid the chip-stock sell-off! Goldman Sachs calls for South Korea’s Kospi index to rise to 12,000 points, revealing 3 major tailwinds.

Chip Stock Circuit Breaker Sell-Off Is Just a Half-Time Break? According to foreign media reports today (6th), although the Korean stock market has recently fallen into panic due to violent fluctuations in the semiconductor sector, Wall Street investment bank Goldman Sachs has issued a report to strongly support it. Goldman Sachs believes that the fundamental momentum of the Korean stock market remains strong, and funds will begin to rotate to industrial stocks such as energy and materials. It expects the Kospi index to challenge the 12,000-point mark within the next year, with potential upside of over 20%.

(Previous context: Big short Michael Burry increases short positions on Nvidia and Tesla: Korean chips are "the beginning of the end for AI") (Background supplement: Everyone becomes a gambler? Korea's leveraged ETF surges 800%, SK Hynix's "2x Long" scale crushes Nvidia and Tesla)

In the first half of 2026, the Korean stock market was undoubtedly the brightest star in Asia. Driven by the AI memory chip duopoly — Samsung Electronics and SK Hynix — the Korea Composite Stock Price Index (Kospi) nearly doubled in the first half.

However, this rally has hit turbulence recently. Affected by violent fluctuations in chip stocks, the Korean stock market even triggered a circuit breaker. Today (6th), the Kospi index also opened higher but closed lower, ending down 0.5%, raising strong market concerns about "excessive concentration of gains in a single sector." But Wall Street's top investment bank Goldman Sachs remains confident, maintaining a "strong bullish" stance in its latest report.

Goldman Sachs cites three supporting reasons: The rally is not over

In its report, Goldman Sachs admits that the market's heavy reliance on two major chip stocks is indeed a risk, but this does not mean the bull market is about to end. Goldman Sachs sets the Kospi 12-month target index at 12,000 points, implying that from current levels, the Korean stock market still has over 20% upside potential. The core reasons supporting this optimistic forecast are three:

| Bullish Reasons | | --- | | Goldman Sachs View and Data Analysis | | --- | --- | | 1. Capital Rotation, Rally Broadening | Earnings momentum in the second half will shift from pure AI chips to a wider range of beneficiaries. Foreign capital has already been observed deploying funds into traditional sectors such as energy, materials, and industrials, which have relatively reasonable valuations. | | 2. Strong Corporate Earnings Expectations | It is estimated that total corporate earnings in South Korea will see a staggering 320% growth in 2026, and will continue to maintain a 35% growth rate in 2027. Excluding the duopoly, valuations of other stocks remain attractive in Asia. | | 3. Retail Investor Positions Not Yet Overheated | Although retail activity has increased, positions are still far below historical overheating levels. In addition, the growth in margin debt balances is mostly due to the market value expansion from "stock price increases," rather than excessive new borrowing. |

Domestic capital in Korea still has huge room to enter

In addition to fundamental support, Goldman Sachs also highlights the potential "domestic buying" momentum in the Korean stock market. The report points out that Korean household asset allocation is still extremely concentrated in real estate, cash, and overseas stocks (especially U.S. stocks). This means that once a broad domestic recovery is confirmed, local Korean investors' allocation to the domestic stock market still has very large room for growth.

In summary, Goldman Sachs believes that the next phase of the Korean stock market will be healthier and broader, no longer a "one-man show" of AI memory chips. However, Goldman Sachs analysts also warn that amid global macroeconomic uncertainties and tech stock rotations, the path to 12,000 points may be a "bumpy road." Investors need to fasten their seatbelts and flexibly respond to short-term market fluctuations.