A banker works in front of multiple monitors in the dealing room of Hana Bank in Seoul, South Korea, on May 12, 2026.
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South Korea’s stock market has already doubled this year, but some strategists say the rally could continue as the country’s artificial intelligence semiconductor giant continues to drive revenue growth.
Goldman Sachs on Wednesday raised its 12-month target for the benchmark Kospi to 12,000, implying an upside of more than 35% from current levels.
“Earnings are driving returns for Asian stocks,” Goldman strategists led by Timothy Mo said, adding that they remain overweight South Korea due to expectations for “improved earnings, undervalued memory cycles and catalyst valuations.”
The Kospi is up almost 100% year-to-date, making it one of the world’s best-performing major indexes. But the gains have been increasingly concentrated in a few powerful technology companies, particularly memory chip maker SK Hynix and electronics giant Samsung Electronics.
Global financial services firm BTIG said the rapid rise comes with risks.
“Over the past six sessions, the KOSPI has risen 12.15%. Still, the range has been negative every day, not by a trickle,” said Jonathan Krinsky, chief market technician at BTIG. “This is what happens when a few big companies make up to 50% of an index.”
Peter Kim, global strategist at KB Financial Group, said while South Korea’s “Twin Towers” still significantly outperformed the broader market, the semiconductor cycle remained the key driver of stock performance.
“Stock market movements have largely diverted attention from the fundamental vulnerabilities of the Korean economy and its industries,” Kim wrote in a note to clients, warning that China was rapidly gaining market share from South Korean exporters and the broader domestic economy remained depressed.
The disconnect between the strong stock market and weak domestic conditions also complicates the outlook for policymakers. South Korea’s economy faces pressure from slowing wage growth, weak job creation and rising energy prices, despite rising stock and real estate prices.
However, global investors appear willing to avoid such risks for now, as AI-driven returns continue to dominate the region’s stock markets. Goldman expects technology to continue to be the market’s best-performing sector, with earnings per share for Asia-Pacific stocks increasing 60% in 2026.
