World's hottest market could soar another 40% - Goldman Sachs forecast

Goldman Sachs expects the rally in the South Korean market to continue: the bank's chief Asia strategist Tim Mow raised the target for the Kospi index to 12,000 points by the end of 2026, suggesting a potential upside of about 40% from the June 4 close. The investment bank reiterated a bullish overweight recommendation for the country's market, MarketWatch reported.

The scale of this optimism is impressive: back in early March, amid the crisis in the Middle East, even the previous benchmark of 7,000 points seemed too ambitious to investors, the publication writes. In 2026, the Kospi has doubled, showing the best result among major stock markets in the world. By comparison, the S&P 500 index has added about 11% since the beginning of the year.

The Goldman strategist also revised his forecast for earnings per share (EPS) growth for South Korean companies in 2026 to 320% from 300%, and he expects another 35% increase in 2027, MarketWatch reports. The bank's assessment reflects the overall market sentiment: while the consensus forecast at the start of the year was for moderate 48% growth, it has now reached 277%.

With such strong fundamentals, even if the Kospi index soars to 12,000 points, the market will not overheat: it will trade at a P/E multiple of 8, Mou points out. That is, the stock will remain inexpensive relative to the global average due to the rapid growth in profits. And right now, they're trading even cheaper, at just five earnings forecasts.

The revision of Goldman's forecast is due to strong financial results of South Korean corporations, MarketWatch notes. The main contribution is made by IT giants - memory chip makers Samsung Electronics and SK Hynix, which account for almost 50% of the weight in the index.

Revenue growth in the sector shows no signs of slowing down, the publication emphasizes. An additional driver was the statements of Nvidia CEO Jensen Huang at the Computex 2026 technology conference in Taipei. Nvidia is the main buyer of high-bandwidth memory from Samsung and SK Hynix, and Huang explicitly urged the partners to increase capacity: "Please produce more".

According to Mou, as demand for computing power exceeds supply capacity, investors are underestimating "the likely cycle length in the semiconductor memory sector," hence the discount on South Korean securities.

Another catalyst for their revaluation could be the success of the government's Value-Up program, a government initiative aimed at raising corporate governance standards and protecting minority shareholders' rights.

In addition to South Korea, Goldman Sachs highlights Taiwan as another key beneficiary of the global AI trend. Mou estimates that about 85% of the weighting of Taiwan's benchmark TWSE index is directly linked to AI. Iinvestbank upgraded the country's stock market rating to overweight and raised the target to 51,000 points. This is 12% higher than the current level.

This article was AI-translated and verified by a human editor