Goldman Sachs cuts Kospi target 25% after earlier push to 12,000

Goldman Sachs has cut its 12-month Kospi target by 25 percent, from 12,000 to 9,000, citing a more conservative approach to valuing Korean companies amid the index's recent sharp decline.

Bloomberg reported Sunday that Goldman Sachs strategists, including Timothy Mo, lowered the target in a research note published that day.

However, the strategists said in the report that "the market is pricing in an overly negative fundamental outlook," pointing to the undervaluation of Korean equities.

"We have lowered our target to reflect more conservative assumptions in how the market prices corporate fundamentals," they wrote, while adding that "the Korean stock market remains attractive from a risk-reward perspective."

The strategists noted that even the revised target implies upside of more than 60 percent from current levels.

Goldman Sachs had raised its Kospi target several times this year as the domestic equity market rallied, lifting it to 12,000 in June. The bank maintained that target until Sunday's downward revision.

Meanwhile, Bloomberg described the Korean market as "the cheapest market in the world." The Kospi's price-to-earnings ratio has fallen to as low as four times.

As major investment banks continue to trim their Kospi targets, Nomura Securities drew attention by recently setting price targets of 670,000 won ($506) and 4.7 million won for Samsung Electronics and SK hynix, respectively. Nomura also said in a recent report that concerns over AI-related investment are overblown.