Goldman Sachs raises valuation for Korean stock market

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SEOUL: Goldman Sachs has raised its valuation for the Korean stock market to “overweight” amid expectations for a recovery in the nation’s large-cap tech industry, the global investment bank said Monday.
In a research report, the company expected the benchmark KOSPI to make a meaningful rebound next year. We are raising Korea to overweight on an expected global cyclical upturn and further recovery in semiconductor earnings, the report said.
Korea will also top the list of countries in terms of posting largest earnings growth in Asia next year, according to the report.
Korea is likely to deliver the strongest earnings growth in 2020, the report said. After a minus 33 percent growth in 2019, earnings in the tech-heavy market of Korea may rebound 22 percent.Samsung Electronics and SK hynix, the two most valuable companies on the local stock market, account for almost 25 percent of the total KOSPI market capitalization.
The chipmakers have in recent quarters suffered major setbacks, hit hard by falling prices and sluggish demand for memory chips.
But local brokerages raised the valuation for their stocks next year amid hopes for a recovery in the global semiconductor market and the rise of the fifth-generation (5G) network.We expect the tech hardware sector to lead earnings recovery in Korea on stabilizing memory pricing, normalizing DRAM and NAND (flash memory) inventories and better demand and supply dynamics, the report said.
The investment bank went on to predict some non-chip sectors in Korea will also continue to pick up steam for growth next year.
In Korea, a pick-up in the global economy is likely to benefit globally sensitive sectors like industrials, autos and materials, it said.

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