• Goldman Sachs (GS) maintains overweight view on South Korea, targeting KOSPI at 12,000 despite recent volatility.
  • Samsung’s ex-dividend and expiring buybacks could pressure the index in October.
  • AI-memory upcycle remains the core driver, but risks loom.

Goldman’s Evolving Bull Case

Goldman Sachs has reaffirmed its 12-month KOSPI target of 12,000, arguing that the market is underestimating the duration and earnings power of the AI-memory upcycle. The investment bank’s optimism has been building throughout the year: it raised its target from 7,000 in March to 8,000 in April, 9,000 in May, and finally 12,000 in June. Just last month, the index breached the previous breakout threshold of 7,000–7,200, with one recent close at 7,007.72.

“The market is pricing too short a memory boom,” Goldman analysts wrote in a note to clients, citing an 8x forward P/E framework and earnings growth estimates exceeding 300% for 2026. The bullish case rests on strong foreign and institutional buying, record memory-chip momentum, and Samsung Electronics (005930.KS)’ hefty dividend program.

Samsung: The Heavyweight Behind the Rally

Samsung Electronics is central to the KOSPI story, and its latest quarterly results underscore why. The company reported record Q2 2026 revenue of KRW 171.5 trillion and operating profit of KRW 89.5 trillion, with both metrics surging quarter over quarter. The Device Solutions division, which houses its memory and foundry operations, generated KRW 127.5 trillion in revenue and KRW 89.2 trillion in operating profit, highlighting the outsized role of semiconductors in Samsung’s earnings.

Despite weakness in its mobile and network businesses—which posted a KRW 0.7 trillion operating loss—Samsung’s memory products, including DRAM, NAND, and high-bandwidth memory (HBM), are riding a wave of demand from AI data centers. The company is distributing roughly KRW 30 trillion in cash dividends this quarter as part of an estimated KRW 90–110 trillion shareholder-return program for 2026.

October Jitters and the Ex-Dividend Effect

While the near-term outlook remains bullish, Goldman warns that October could bring mechanical headwinds. When Samsung goes ex-dividend, its share price will adjust downward by approximately the dividend amount, dragging on the index given the stock’s heavy weighting. Additionally, major corporate buyback programs are set to expire, removing a temporary source of demand.

Foreign buying has been a key support for the KOSPI, but any slowdown could make it difficult for the index to sustain a breakout even with strong earnings. Retail investors, who have been selling near the 7,500 level, may also add to volatility.

The broader macro backdrop remains supportive. South Korea’s August semiconductor exports hit a record $46.65 billion, up 209% year over year, with chips accounting for 47.5% of total exports. The Asian Development Bank recently raised its 2026 growth forecast for Korea to 3.2% from 2.6%, citing AI-chip exports and expansionary fiscal policy.

Risks and the Korea Discount

Goldman’s optimism is not without caveats. The AI-memory upcycle is highly concentrated: July data showed memory semiconductor export growth of 276.9% year over year, while system-semiconductor exports fell 0.7%. A slowdown in AI capital expenditure, increased memory supply, or a retrenchment in foreign risk appetite could trigger a sharp correction.

Additionally, the persistent “Korea discount”—weaker valuations due to governance and shareholder-rights concerns—remains a factor. The government’s Value-Up program aims to narrow that gap, with 756 listed firms having disclosed value-up plans as of early September, representing 87.7% of KOSPI market capitalization. However, Reuters reported a muted market response to Samsung and SK hynix (SKHY)’s large payout plans, indicating investors want more durable reform.

Goldman’s 12,000 target represents the most bullish end of market forecasts. It assumes both earnings delivery and some narrowing of the Korea discount. For now, the investment bank is sticking to its call, but October’s technical headwinds could test the resolve of even the most optimistic investors.

Correction: An earlier version of this article misstated the percentage of KOSPI market capitalization represented by value-up disclosures. It is 87.7%, not 78.7%.