Korea: A broader opportunity set in 2H26

Research evidence excerpt

Korea: A broader opportunity set in 2H26

Goldman Sachs Asia-Pacific Portfolio Strategy

1. How did Korea perform in 1H26? Earnings-led rally, but increasingly narrow leadership

Korean equities delivered the strongest performance in Asia during 1H26. The 92%

KOSPI rally was driven overwhelmingly by earnings upgrades, with AI-related technology

hardware and semiconductor stocks accounting for the majority of market gains. While

the KOSPI reached successive record highs, market breadth narrowed meaningfully. The

advance/decline ratio has fallen to its weakest level since the pandemic, highlighting that

the rally has become increasingly concentrated in a handful of AI bottleneck and

memory beneficiaries rather than reflecting broad-based earnings improvement across

the market.

AI beneficiaries dominated market returns: Nearly 90% of Korea’s year-to-date

market gains have been generated by technology hardware and semiconductor stocks.

These sectors benefited from accelerating AI investment, improving memory pricing,

and substantial upward earnings revisions. By contrast, most other sectors delivered

only modest contributions to overall index gains despite positive absolute returns,

leaving overall market performance increasingly dependent on a narrow group of

AI-related earnings winners.

Earnings -not valuation- have driven Korea’s outperformance. Korea’s strong relative

performance in 1H26 has been driven by earnings upgrades rather than valuation

expansion. Forward EPS expectations have risen nearly by 200%, while forward P/E

multiples have modestly compressed over the same period. The same pattern is evident

across sectors, where returns have generally tracked earnings revisions rather than

multiple expansion, with only a few thematic areas- such as robotics- benefiting