KOSPI futures fell 2.9%, but memory prices and chip exports remain supportive; Goldman Sachs is also watching South Korea’s list of low price-to-book companies and changes in earnings at Kia and cosmetics companies.
The KOSPI has fallen 40% from its June peak. Goldman Sachs believes memory stocks have priced in excessively pessimistic earnings assumptions, while non-memory stocks have also been caught in the sell-off. But sustained high volatility and slowing earnings revisions will continue to depress valuations, so it has cut its target from 12000 to 9000 points.
Goldman Sachs has cut its KOSPI target by 25% but still sees more than 60% upside from current levels: memory earnings have already been heavily discounted, and non-memory stocks also trade at a valuation discount, while persistent outflows continue to weigh on market pricing.
South Korean stocks fell while earnings expectations were revised up slightly. Goldman Sachs considers both memory and non-memory stocks undervalued, but has adopted more conservative valuation assumptions; persistent outflows and doubts about earnings sustainability remain key constraints on a recovery.
