Goldman Sachs argues that South Korea’s equity market is set up to keep outperforming the big US benchmarks over the coming quarters. After a roughly 70–76% gain in 2025, the KOSPI has already added close to 50% year to date at its February/March peak, briefly trading above the 6,000 mark and setting fresh all‑time highs, while the S&P 500 has returned only around 4–5% over the same stretch. The rally has been heavily driven by semiconductor giants Samsung Electronics and SK Hynix, which are riding the global AI and data‑center investment boom and helped push 2026 consensus earnings growth expectations for Korea well into double and even triple digits in some strategist models.
Policy is reinforcing that momentum. Seoul has introduced special “reshoring” investment accounts that offer reduced or fully exempt capital‑gains taxation on foreign stocks if retail investors later recycle that capital back into Korean equities, effectively rewarding those who bring money home. Since the scheme was launched, the number of such accounts has climbed to around 160,000, with assets surpassing roughly 700 million dollars, while flows from Korean retail into US stocks have noticeably slowed as part of that liquidity is redirected back into the local market. Put together with still‑supportive domestic liquidity, record brokerage deposits and a KOSPI year‑end target that Goldman has lifted to 7,000 (from 6,400 previously), the bank’s view is that Korea can continue to beat the S&P 500 – as long as the chip‑driven earnings cycle holds up and investors are comfortable with higher volatility and policy‑driven market dynamics.
Why Goldman believes $^KS11 can keep beating the U.S.
Goldman analysts put several factors together:
Index performance - after +76% in 2025, the KOSPI has tacked on another roughly 50% since the start of this year, many times more than U.S. indices, which typically hover in the 10-20% per year range in good years.
Macro Data and Market Breadth - The KOSPI recently posted a weekly gain of 4.6%, thanks to better-than-expected first quarter GDP growth and broader participation across the market. While pharmaceuticals, insurance and financial houses underperformed, shipyards, engineering and technology all grew strongly.
Domestic money inflows - Small Korean investors have begun to sell foreign ETFs to a greater extent, especially those tied to US equities, and in turn have been pouring funds into domestic funds and ETFs focused on the Korean market. This supports the demand for stocks in the KOSPI index.
Goldman $GS notes that despite recent sell-offs in technology and automotive titles, foreign investor interest in the Korean market remains strong. According to JPMorgan $JPM, Korea was "the hottest market in the world" before the recent geopolitical tensions over Iran, and the recent rise in the KOSPI suggests that sentiment has recovered and the index is once again approaching all-time highs.
AI, chips and defence: the engine of Korean growth
A major theme in the Korean market is the "AI supercycle" in semiconductors, according to Goldman and other banks. South Korean firms such as Samsung Electronics $SSNLF and SK Hynix are among the world's largest producers of memory and data centre chips, which are essential for running large-scale AI models.
It is the growth in demand for AI accelerators and HBM-type memories that has pushed SK Hynix shares up hundreds of percent in the past year and contributed significantly to the overall index's rise. In addition to semiconductors, the Korean market is also benefiting from a boom in the defence industry, with orders for ammunition, tanks, artillery and air defence systems from Europe and other regions boosting sales at Korean arms companies.
Goldman rates the KOSPI as a market with "higher growth sensitivity" - that is, higher volatility, but also with more potential if the favorable environment for chips, AI and the defense industry continues. Compared to US indices, where many large tech firms are already trading at very high earnings multiples, the Korean market offers a more interesting combination of growth and valuation, according to the bank.
Korean stocks and ETFs available on the NYSE and Nasdaq
If you want to make a bet on Korea through the U.S. exchanges, there are a few avenues. Below are a few examples that can be commonly purchased through brokers with access to the NYSE or Nasdaq:
ETFs and funds on the Korean market
iShares MSCI South Korea ETF (EWY, NYSE) - The best-known ETF focused on the South Korean market, it tracks the MSCI Korea index, which is heavily weighted toward large companies like Samsung and Hyundai.
iShares MSCI Korea UCITS (often ticker EWK or similar, depending on the exchange) - European version, but some versions trade in New York; suitable for broader exposure to the Korean market.
Individual South Korean companies traded in the US
Korea Electric Power Corporation (KEP, NYSE) - Korea's largest power utility, traded directly in New York via ADR.
For the other big names (Samsung Electronics, SK Hynix, Hyundai Motor), while the main liquidity is on the Korean exchange KRX, their exposure is usually gained through the aforementioned ETFs, which have them among their core positions.
So for an investor who doesn't want to deal with local currency, time zone or direct access to the KRX, one of the big Korea ETFs is the easiest route. This effectively gives you a ride on what Goldman and other houses are describing - KOSPI growth driven by chips, defense and domestic capital inflows.
What does this imply for the portfolio
Goldman Sachs and JPMorgan agree that the South Korean market has all the ingredients to beat the major US indices on a relative basis at this stage of the cycle: strong exposure to AI and semiconductors, support from the government and domestic investors, and still relatively lower valuations than the US. At the same time, it is a market with higher volatility and sensitivity to global geopolitics, making it more suited as a dynamic portfolio component than as a "safe haven."