South Korea's benchmark equity gauge posted a sharp one-day decline, with the KOSPI falling 6% on Friday and wiping out the week's earlier gains, Goldman Sachs reported. The bank pointed to developments around the Trump-Xi Summit and sustained foreign investor outflows as principal factors weighing on sentiment.
Sector performance over the week showed a mixed picture. The Auto, Insurance and Telecom sectors outperformed peers, while Shipbuilding, Securities and Utilities underperformed. Foreign selling was a persistent feature, concentrated particularly in KOSPI Technology and Auto names.
Currency moves accompanied the equity weakness. The Korean won weakened by 2.6% versus the US dollar over the week and declined 1.4% against both the Japanese yen and the euro. Goldman also noted that the Korea Equity Risk Barometer stood at -0.9, a level the bank characterised as remaining within risk-averse territory.
Goldman emphasised the concentration of the year-to-date rally. Despite a 78% gain in the KOSPI so far this year, only 68 out of 835 listed companies have outpaced the index. Those 68 names represent nearly 66% of total market capitalisation, underscoring how much of the market advance has been driven by a relatively small number of large-cap issues.
That concentration is central to Goldman’s view that opportunities may exist among underperforming stocks, particularly should market breadth recover. The bank observed that Korea's daily market breadth recently bounced back from readings below the -1 standard deviation threshold, suggesting an early improvement in the proportion of advancing versus declining issues.
Large-cap versus smaller-cap dynamics remain pronounced. The KOSPI 50 large-cap index has outperformed the KOSPI 200 small- and mid-cap segment by more than two standard deviations, a divergence Goldman flagged as indicating potential opportunities among smaller companies if conditions shift. Supporting that view, Goldman noted that nearly 70% of KOSPI-listed names trade below book value.
On fundamentals, KOSPI 12-month forward earnings per share were revised up by 0.1% overall. Earnings revisions were strongest in the Securities sector, while the Utilities sector saw the biggest downward revision, according to the bank.
Separately, MSCI's May 2026 index review, announced on May 12, will take effect after the close on May 29. Goldman highlighted that Korea is set to receive one of the largest net passive inflows among regional markets at $1.9 billion, despite the removal of three Korean stocks from the MSCI Standard Index.
Data points mentioned in this report
- KOSPI: down 6% on Friday, erasing weekly gains
- Korean won: -2.6% vs US dollar; -1.4% vs Japanese yen and euro (week)
- Korea Equity Risk Barometer: -0.9
- YTD KOSPI gain: 78%; only 68 of 835 stocks have outperformed the index
- Those 68 stocks account for nearly 66% of market capitalisation
- KOSPI 12-month forward EPS revision: +0.1%
- MSCI May 2026 review: Korea net passive inflow of $1.9 billion; three Korean stocks removed