Woofun AI reports that Goldman Sachs has issued a second-half strategy framework for the South Korean stock market, retaining a 12-month KOSPI target of 12,000 points. This projection implies over 20% upside from current levels, supported by anticipated 320% full-year earnings growth and a forward P/E ratio of 6.65x. The index currently trades 2.7 standard deviations below its historical mean, marking the lowest deviation since 2009.

Samsung Electronics and SK Hynix contributed to almost 90% of the index's gain, with their combined market value weight rising to 56%, and earnings weight as high as 72%. Goldman Sachs believes this concentration reflects earnings strength rather than a bubble, but market breadth has fallen to its lowest level since the pandemic, and if the upward trend continues in the second half of the year, volatility will intensify.

To address retail investors' risk concerns, Goldman Sachs pointed out that leverage levels are overstated. The growth in leverage ETFs' size mainly comes from asset appreciation rather than new leveraged funds, and the actual margin loan-to-deposit ratio is decreasing. Retail investors still hold a significant amount of cash for buffering, and their asset allocation is still primarily focused on real estate.

Goldman Sachs believes that in the second half of the year, Korean stock market opportunities will transition from the memory chip sector to six major themes: the industrial sector (acceleration of defense orders, awaiting release of VLCC replacement demand), robotics and physical AI (the Korean automotive parts ecosystem is expected to become a key supplier for humanoid robots), batteries and power infrastructure (driven by data center storage demand), beneficiaries of corporate governance reform (starting in July, with over 70% of listed companies having a PBR of less than 1x), reflation trades (semiconductor profit spillover effect driving GDP revisions and extension of rate hike cycles), and semiconductor capital expenditure supply chain (government's "Three Major Super Projects" plan with an investment of 80 trillion Korean won).

Goldman Sachs also highlighted threefold risks: third-quarter seasonal weakness, technical retracement pressure from the index significantly deviating from the moving average, and leverage ETF market maker hedging operations amplifying volatility. The combination of earnings growth and undervaluation makes South Korea the market with the lowest PEG ratio in Asia, and the current valuation dislocation provides significant room for stock selection in the second half of the year.