KOSPI rose 9% this week as earnings upgrades drove the Korean market recovery

Overview

This report is Goldman Sachs' weekly Korea equity market note, focusing on the sharp rebound in KOSPI amid US-Iran ceasefire news and better-than-expected preliminary Q1 earnings from Samsung Electronics. The report emphasizes that the April recovery was driven mainly by earnings revisions rather than pure valuation expansion; even with KOSPI up 9% this week, the forward P/E has fallen to its lowest level since 2009.

Core views

The report's core view is that the Korean market's near-term performance is being supported by improving earnings expectations, the semiconductor cycle, and foreign capital returning. Samsung Electronics, Korea's largest semiconductor stock, materially beat earnings expectations and drove further upward revisions to the market earnings outlook. TrendForce expects memory prices to rise in Q2, while Korea's memory exports have been growing at triple-digit rates, supporting continued earnings revision momentum. On the flow side, foreign investors have turned buyers of KOSPI, especially into technology and chemicals; mutual fund allocations have also increased, but overall positioning remains underweight, leaving room for further catch-up.

Analysis framework

The report uses a top-down market strategy framework combining market performance, sector winners and losers, earnings forecast revisions, valuation percentiles, foreign flows, mutual fund holdings, exchange-rate moves, and Korea's equity risk barometer. It focuses on KOSPI forward EPS, NTM P/E, EPFR fund positioning, foreign holdings, and sector earnings revisions to judge the quality and durability of the Korean market rebound.

Methodology notes

• equity_strategyearnings_revision_and_valuation_framework

  Earnings revisions and valuation re-rating

  The report breaks market gains into earnings expectation improvements and valuation changes, noting that the April recovery in Korea was mainly driven by earnings upgrades; after the index rose, KOSPI NTM P/E actually fell to 7.1x because earnings expectations were revised up even faster.

• fund_flow_analysisepfr_mutual_fund_positioning

  Mutual fund relative-to-benchmark allocation

  The report uses preliminary March EPFR data, covering about 25% of reported total AUM, to assess changes in Korea allocation and underweight positioning across Asian funds, emerging market funds, Asia ex-Japan funds, and global funds.

• risk_indicatorkorea_equity_risk_barometer

  Korea equity risk barometer

  The report cites the GSSRKERB Index to gauge risk appetite in the Korean equity market; the latest reading was -1.5, still in risk-off territory, indicating that market sentiment has not fully shifted to risk-on.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• KOSPI

  core market index

  Strengths

  Up 9% this week, with significant earnings upgrades and valuations still at historical lows.

  Weaknesses

  The risk barometer remains at -1.5, and sentiment is still risk-off.

  Comparison

  Construction, technology, and telecom outperformed, while leisure, pharmaceuticals, and food & beverage lagged.

  Risks

  Renewed geopolitical tensions, weaker-than-expected earnings upgrades, or a reversal in foreign inflows.

• Korean technology and semiconductor sector

  major contributor to earnings upgrades and fund inflows

  Strengths

  Samsung Electronics beat earnings expectations, technology saw the strongest revisions, and memory prices and export data support earnings momentum.

  Weaknesses

  Foreign holdings in semiconductors are still at a light -1.5 standard deviation level, indicating prior heavy outflows.

  Comparison

  Compared with shipbuilding, technology has seen stronger earnings revisions; relative to other sectors, it has contributed more to the market-wide earnings upgrades.

  Risks

  Sustained weakness in memory-price improvement, slower global tech demand, or less-than-expected foreign re-entry.

• KRW

  an asset linked to Korea risk sentiment and foreign flows

  Strengths

  Appreciated versus the USD, JPY, and EUR this week, reflecting short-term improvement in sentiment toward Korean assets.

  Weaknesses

  The exchange rate remains sensitive to global risk appetite, rates, and geopolitical factors.

  Comparison

  Appreciated 1.6% versus the USD, 1.4% versus the JPY, and 0.2% versus the EUR.

  Risks

  A stronger USD, rising regional risk, or capital outflows could pressure the KRW.

Key data

• KOSPI weekly change+9% wowThe gain was driven by US-Iran ceasefire news and Samsung Electronics' better-than-expected preliminary Q1 earnings.
• KOSPI 12-month forward EPS revision+17.3%Technology saw the strongest earnings upgrades, while shipbuilding saw the largest downgrades.
• Korean market 2026 consensus earnings growth206%Supported by an upgraded outlook for the largest semiconductor stock.
• Korean market 2027 consensus earnings growth18%The report says market earnings expectations were revised up further.
• KOSPI NTM P/E7.1xAbout -2.3 standard deviations, in the lowest range since 2009.
• KRW versus USD+1.6%KRW appreciated versus the USD this week.
• KRW versus JPY+1.4%KRW appreciated versus the JPY this week.
• KRW versus EUR+0.2%KRW appreciated versus the EUR this week.
• Korea Equity Risk Barometer-1.5Still in risk-off territory.
• EPFR preliminary coverage ratioabout 25% of total AUM reportedUsed for the preliminary assessment of March mutual fund positioning.

Impact & implications

From an investment perspective, the Korean equity market rebound is high quality because the index rise has been accompanied by clear earnings upgrades while valuations remain low. Semiconductors, technology, and chemicals are benefiting from earnings revisions and inflows. However, mutual funds remain underweight Korea and foreign semiconductor holdings are still light, meaning that if earnings momentum continues, further positioning catch-up could continue to support the market. Conversely, the risk barometer remains in risk-off territory, showing that macro and geopolitical risks have not been fully eliminated.

Risks

• US-Iran-related geopolitical news could reverse again and affect global risk appetite.
• The Korea equity risk barometer remains in risk-off territory, showing that market risk appetite has not fully recovered.
• After the KOSPI rebound, if earnings upgrades do not continue, low-valuation support may weaken.
• If the semiconductor cycle, memory prices, or export growth underperform expectations, Korea's earnings revision momentum will be hurt.
• Improved mutual fund and foreign positioning is still based on preliminary data, and Korea remains underweight overall, so fund flows remain uncertain.

What to watch

• Samsung Electronics' upcoming official Q1 results and management guidance.
• Further changes in TrendForce's Q2 memory-price forecasts.
• Whether Korea's memory exports continue to grow at triple-digit rates.
• Whether foreigners keep buying KOSPI technology and chemicals.
• Full March EPFR and subsequent-month mutual fund positioning data.
• Whether KOSPI NTM P/E stays at a low level and whether earnings upgrades can continue to offset valuation pressure from the index's rise.
• Whether the GSSRKERB Index improves from the -1.5 risk-off zone.