Analyst says South Korean stocks are still 'undervalued', names top picks

Despite a blistering rally that has seen South Korea’s benchmark Kospi index surge a further 40% this year, Goldman Sachs insists the market remains a bargain.

Following a world-leading 75% return in 2025, the peninsula’s stocks are currently caught in a tug-of-war between retail-driven volatility and massive institutional inflows.

While the “AI trade” has provided the fuel, a structural shift in corporate culture is proving another key engine, the firm’s strategists told clients in their latest research note.

In their report on Friday, analysts also named their top picks among “undervalued” South Korean stocks.

Why Goldman Sachs sees South Korean stocks as undervalued

The core of the “undervalued” thesis lies in the slow-motion collapse of the “Korea Discount” – a long-standing valuation gap caused by the opaque governance of “chaebols,” or family-owned conglomerates.

Goldman Sachs analysts noted in a report this week that reforms to corporate governance are improving “incrementally,” which is creating space for “undervalued” opportunities.

Historically, these firms suppressed dividends, but a Japan-style reform movement is now underway.

Goldman observed that the market is “still at a discount relative to regional and global peers, despite sustained progress in enhancing shareholder value through the recent AGM season.”

With roughly 70% of the Kospi still trading below book value, the firm views the current cycle as “early-stage implementation,” suggesting that the most meaningful gains for shareholders are likely to be “back-end loaded” into future cycles.

Goldman Sachs’ bull case for Samsung Electronics

Samsung Electronics remains Goldman’s premier pick for capturing the explosive intersection of memory demand and semiconductor innovation.

The firm highlighted that year-to-date performance in Korea has been largely driven by “earnings upgrades, particularly on the back of strong AI-related semiconductor demand.”

As a global leader in HBM (High Bandwidth Memory) and NAND flash, Samsung shares are uniquely positioned to benefit from the “exceptionally favorable” supply shortfall currently hitting the market.

According to the investment firm, Samsung Electronics is also viewed as a litmus test for the “Value Up” program.

It praised the “increased number of share buybacks and increased treasury share cancellations” within the sector, noting that as Samsung aligns more closely with global shareholder expectations, its valuation – which has lagged behind pure-play AI rivals – has significant room to re-rate.

Goldman Sachs’ bull case for HYBE

While hardware powers the index, HYBE represents the “soft power” growth story that Goldman Sachs considers a cornerstone of the “K-Culture” thematic.

The agency behind global icons – including BTS and NewJeans – is no longer viewed as a mere entertainment house, but as a diversified IP powerhouse.

Goldman’s analysts see the firm’s multi-label strategy and its proprietary Weverse platform as key differentiators that allow it to monetize global fandoms with high-margin digital products.

This pivot toward “digital culture” makes HYBE a resilient pick even amid macroeconomic shifts. Importantly, HYBE’s revenue is decoupled from energy prices – a risk underscored by the Iran war – relying instead on the global export of media.

For Goldman Sachs, HYBE stock is a primary vehicle for investors looking to bypass industrial volatility and tap into the structural, global demand for Korean creative IP.

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