Goldman Sachs Upgrades Taiwan and South Korea as AI Chip Rally Drives Asia’s Sharpest Market Reordering in a Generation
Goldman Sachs upgraded Taiwan’s benchmark stock index to overweight and raised its 12-month target for South Korea’s Kospi on Wednesday, June 3, as an artificial intelligence-driven rally in semiconductor stocks reshapes the global equity landscape. The bank set a 12-month target of 51,000 for Taiwan’s benchmark Taiex index and lifted its Kospi target to 12,000 from 9,000. The revisions came alongside a warning that the rally’s narrow breadth and rising speculation are creating meaningful correction risks. Dubai 92
“We lean into North Asia where earnings growth is strongest,” wrote analysts including Timothy Moe, chief Asia-Pacific equity strategist and co-head of macro research at Goldman Sachs. INQUIRER.net
The Scale of the Rally
The move reflects market gains that have rewritten established rankings. South Korea’s Kospi has surged roughly 100% year-to-date, making it one of the world’s best-performing major indexes. The South Korean stock market was the 11th-largest by market capitalisation at the start of the year and is now the fifth-largest, according to Dow Jones Market Data. Taiwan’s stock market grew from the ninth-largest to the sixth-largest over the same six months. SunStarThe Manila Times
The MSCI Asia Pacific ex-Japan index is up 27% year-to-date, but excluding South Korea and Taiwan it is down 4%, according to Goldman’s note — a statistic that captures just how concentrated the gains have been. BusinessWorld
Goldman sees 60% earnings-per-share growth for Asia Pacific equities in 2026, with technology remaining the market’s strongest-performing sector. SunStar
What Is Driving the Gains
The rally traces almost entirely to a handful of companies at the centre of the AI hardware supply chain. TSMC alone now accounts for more than 40% of Taiwan’s market capitalisation, while Samsung Electronics and SK Hynix together make up a record 42.2% of South Korea’s Kospi index. RAPPLER
Taiwan is “well over 80%” exposed to AI-related revenue streams while South Korea stands around 60%, Goldman Sachs strategist Timothy Moe told CNBC, as soaring demand for memory chips and advanced semiconductors fuels an unprecedented earnings boom. RAPPLER
“Stocks that are delivering growth in earnings, or revenues in the case of earlier stage industries, are being rewarded, while those that are falling short on growth are being punished or ignored,” the Goldman analysts wrote. Euronews
The Taiwan Stock Exchange index is up 56.5% year-to-date. Taiwan Semiconductor Manufacturing Company is also up more than 50% year-to-date. MediaTek, the second-largest constituent of Taiwan’s Taiex, is up approximately 200% year-to-date. The Manila Times
In South Korea, the rally has become increasingly concentrated in a handful of heavyweight technology names, particularly memory-chip maker SK Hynix and electronics giant Samsung Electronics. SunStar
Goldman Cuts H-Shares, Stays Overweight on A-Shares
Not all of Asia is receiving the same bullish treatment. The investment bank cut Hong Kong-listed H-shares to market weight, while remaining overweight on mainland-listed A-shares. Goldman did not elaborate publicly on the reasoning for the H-share downgrade in the note reported by Reuters, but the divergence reflects a broader investor preference for direct earnings exposure to AI hardware over Hong Kong-listed proxies. Euronews
The Warning Behind the Upgrade
Goldman’s bullish repositioning came paired with an explicit caution on overheating. Goldman warned of the narrow breadth of the rally and increased speculation, citing sharply higher assets under management in leveraged ETFs. Euronews
South Korea has a very active demographic of retail investors who have a larger influence on the stock market than retail investors in the United States do. They are also comfortable leaning into risk, favouring leveraged ETFs or taking out debt to trade. The Manila Times
“Put spread collars in Korea and Taiwan can hedge correction risk after strong gains and signs of increased speculation,” the Goldman analysts said. The recommendation — a defensive options strategy — signals that the bank sees the rally as real but increasingly fragile at the margin. Euronews
“Both indices have effectively become AI and semiconductor proxies,” said June Chua, head of Asia equities at Manulife Investment Management. RAPPLER
Background
South Korea’s Kospi index has surged more than 80% this year, hitting one fresh high after another, while Taiwan’s Taiex has also repeatedly posted new records as investors piled into the semiconductor trade at the centre of the AI boom. The Kospi rally has become increasingly concentrated in SK Hynix and Samsung Electronics, both of which supply high-bandwidth memory chips used in Nvidia’s AI accelerator hardware. Goldman’s analyst Bruce Lu argued that demand for AI processing capacity is growing at an exponential pace, keeping advanced chip demand ahead of supply and giving manufacturers like TSMC significant pricing leverage, even as they commit to massive capital expenditure programmes. Earlier this year, Goldman had already set a Conviction Buy rating on TSMC and described AI as a multi-year growth engine for the company. RAPPLER + 2
What Happens Next
Goldman’s 12-month Kospi target of 12,000 implies more than 35% upside from current levels, a projection that extends the bank’s bullish stance even as it flags speculative risks. Goldman said gains for AI chipmaker stocks can continue but that risks of a pullback are growing, framing the upgrade as a selective bet on earnings quality rather than a broad endorsement of the rally. The bank’s recommended hedging strategy using put spread collars in Korea and Taiwan suggests clients are being advised to position for continued gains while protecting against a sharp reversal. Whether the Kospi reaches 12,000 within the stated timeframe will depend heavily on whether AI infrastructure spending by major technology companies continues to accelerate through the second half of 2026. SunStarEuronews
