Goldman Strategist: South Korean Equities Set for Post-"Black Monday" Recovery, Eyebrows New Record Highs
Timothy Moe, Chief Asia-Pacific Equity Strategist at Goldman Sachs, stated in a media interview that South Korean equities are projected to rebound and print fresh all-time highs following Monday’s (June 8) spectacular drop.
"In the long run, this will prove to be a technical correction," Moe noted. "The underlying fundamentals of the South Korean equity market remain exceptionally robust."
The Post-"Black Monday" Path Forward
On Monday, the benchmark Kospi Index closed down 8.29%, triggering an early-session circuit breaker that dragged technology shares across Asia lower.
Prior to the retreat, the market had advanced aggressively behind the artificial intelligence supercycle, with a vast contingent of retail and institutional players utilizing leverage to chase returns inside the semiconductor and technology sectors.
"Evidently, there had been an escalation in speculative activity, particularly among South Korean retail traders who have been exceptionally enthusiastic about leveraged ETFs," Moe stated.
"What we are currently observing is a structural unwinding of previously accumulated positions, an unwinding effect that has been mechanically amplified by that very leverage."
Nevertheless, Moe maintained a resolutely constructive bias on the South Korean market, noting: "Once the market digests this localized volatility, we believe it will find its footing and march toward higher highs."
Moe further argued that Kospi valuations remain highly reasonable, projecting that fundamental earnings growth will continue to serve as the primary engine for the market.
Just last week, Goldman Sachs upwardly revised its targets for both South Korean and Taiwanese equities, betting that the secular AI boom would continue to supercharge corporate earnings across these tech-heavy markets.
In its June 3 report, Goldman raised its target for Taiwan’s Taiex index to 51,000 points, while concurrently lifting its Kospi target from 9,000 to 12,000 points.
The firm noted at the time that while the historic run for Asian AI chipmakers likely had extended runway, the risk of a technical correction was mounting.
The note emphasized that at this stage of the cycle, the market is actively rewarding equities capable of delivering tangible earnings and top-line growth, while ruthlessly penalizing or ignoring those that underperform expectations.
Notably, South Korean President Lee Jae-myung also weighed in on Monday, stating that the entire nation is benefiting from the equity market's expansion and asserting that domestic shares remain structurally undervalued.
Lee also issued a stern warning, vowing to aggressively crack down on financial crimes related to stock market and real estate manipulation.