Korea Weekly Goldman

1) 12-Month Outlook: Upcycle Continues, Additional Revenue Room

The KOSPI suggests a ≈ of +15% for an additional 12 months. After a strong rally in 2025, earnings (especially in North Asia) and valuation are expected to continue through next year.

Improvement of governance and expansion of dividends (law and policy drivers) and investment in strategic industries (national policy) support re-rating.

2) Earnings Track: Upcycle

Korea EPS: +30% in 2025 and +35% in 2026 (GS outlook) → A recovery in AI/semiconductor-focused exports led by the recovery of positive growth in 2027.

Q3 Earnings Season: Above Consensus Weight is Higher Than Average (Korea and Asia) → 12M EPS Is Up.

3) Valuation and supply and demand

Despite the absolute value (up from the previous year), the relative value to the global market is still reasonable. Foreign positioning is only a 10-year average recovery, so there is room for addition.

The won strengthened +0.2 percent against the dollar on a weekly basis. Stabilization of interest rates and exchange rates is a tailwind for stocks.

4) Volatility/Technical: “High V Is Rather an Opportunity” ⚡️

VKOSPI (Volatility Index) high. Since the +1σ excess interval in the past statistics, the forward yield for the three to six months averaged +7.5%/+15% (conditionally +10%/+25%) with a high upward probability.

5) Policy and Macro Drivers

The easing/growth-oriented policy stance and the promotion of legislation to improve governance by the integrated government extend the story of profit and multiplexing. Expansion of support for national security, power infrastructure, and strategic industries also contributed to the theme’s revenue.

6) Sector/themed positioning proposal 🎯

Priority (medium):

① AI infrastructure/semiconductor value chain (server, HBM, equipment, and parts) ② national security/disaster, shipbuilding and nuclear power plants ③ power/utility/renewable energy ④ bio/healthcare ⑤ governance structure improvement and cash return story (holdco, low P/B + cash abundance).

Tactical (short term 1-3 months): Complementing the proportion of defensive utilities, banks, and materials/steel with price transfer power in the face of increased volatility.

7) Risk checklist ⚠️

Re-rising external interest rates/re-expanding the dollar, signs of a slowdown in the U.S. economy, adjusting the pace of AI investment Capex, and delaying policies and legislation may slow the pace of value re-rating. However, the current risk barometer (-ERB) is in the risk-off area (-0.8), and it is important to reconfirm policy/performance momentum