South Korea's KOSPI lost roughly 4% during the week as currency depreciation and a sharp pullback in U.S. semiconductor shares weighed on the market. Traders traced the selloff in part to Broadcom's third-quarter guidance for AI semiconductor revenue of $16 billion, a figure that fell short of market expectations despite broadly solid company results.
Market participants singled out Broadcom's below‑consensus AI revenue outlook as the focal point for weakness across U.S. semiconductor stocks, and the impact rippled into Korean equities with chipmakers among the hardest hit.
Currency movements added to the pressure: Goldman Sachs reported that the Korean won weakened 2.3% against the U.S. dollar over the week. The won also fell 1.9% versus the Japanese yen and 2.0% versus the euro, amplifying headwinds for domestic-listed shares priced in local currency.
Foreign investors continued to pare positions in Korean equities, with outflows concentrated in technology and automotive sectors. Sector performance across the KOSPI was uneven: banking, insurance and retail stocks outperformed the broader index, while construction, shipbuilding and steel underperformed.
Despite the market decline, consensus earnings expectations moved higher. Goldman Sachs pointed out that 12-month forward earnings per share estimates for the KOSPI rose 2.6% over the week. Within that aggregate change, construction companies recorded the strongest upward revisions, whereas the securities sector experienced the largest downward revisions.
Goldman reiterated an overweight stance on South Korea and lifted its 12-month KOSPI target to 12,000, a level the bank said implies approximately 37% upside from current levels. The higher target reflects stronger earnings expectations and a conservative valuation assumption of 8 times forward earnings, the bank said.
Goldman also acknowledged several market dynamics that could influence near-term volatility: the KOSPI has more than doubled year-to-date, Samsung Electronics and SK Hynix together now represent over half of total market capitalisation, and rising retail participation has increased the risk of a correction. Nevertheless, Goldman described the long-term investment case for Korean equities as compelling.
Market data highlighted in the week:
- Broadcom's AI semiconductor revenue guide for Q3: $16 billion (below expectations)
- Korean won moves: -2.3% vs USD, -1.9% vs JPY, -2.0% vs EUR (weekly)
- Sector winners: banking, insurance, retail
- Sector laggards: construction, shipbuilding, steel
- 12-month forward EPS for KOSPI: +2.6% (weekly revision)