Key insights
- Goldman Sachs anticipates a near-term "tactical breakout" for the KOSPI index, driven by institutional and foreign buying, a pivot to AI themes, and strong momentum in memory chips. The firm notes that retail investor selling is exhausting and rate fears are priced in. However, headwinds are expected in October due to Samsung's ex-dividend date and the expiration of buyback programs, shifting the index's trajectory to
Investing.com -- Goldman Sachs believes South Korea's KOSPI index is set up for a near-term "tactical breakout," though analyst Chris Cha flagged headwinds building into October in a note on Wednesday.
Cha said retail investors have net-sold more in September, about 18 trillion won, than they bought across July and August combined, defending the 7,000 level, but that this overhang is beginning to exhaust.
With rate fears now priced in after the Fed and a pivot toward a risk-on, agentic AI theme, he sees the setup maturing for an institutional-led breakout above the 7,000-to-7,200 zone.
Cha pointed to strong momentum in memory chips, with fourth-quarter DRAM contract prices projected to rise by double digits quarter-on-quarter, countering bearish forecasts, as HBM4 production constrains standard server output.
He also noted Samsung Electronics' 30 trillion won third-quarter dividend is driving buying ahead of its record date, with further payouts and buybacks offering a 5% to 7% yield backstop into year-end.
Institutional and foreign flows are said to be turning supportive, he said, with local institutions on a three-week buying streak and foreigners turning net buyers this week after five weeks of selling, skewed toward tech.
Still, Cha cautioned about two October headwinds, with Samsung's ex-dividend date on Sept. 29 and a "buyback expiration cliff," with Samsung and SK Hynix having front-loaded their programs.
Once that corporate backstop expires, and with retail cash draining into crypto, he said the KOSPI's trajectory would depend entirely on foreign institutional buying.