Two major foreign investment banks (IBs) have revised down their targets of South Korea's key stock index for 2022 amid rising market volatility following the discovery of the omicron coronavirus variant, industry sources said Wednesday.

In a recent report on South Korea, Goldman Sachs has cut its 2022 target of the benchmark Korea Composite Stock Price Index (Kospi) to 3,350 from an earlier estimate of 3,700.

Goldman Sachs said its downgrade reflects the characteristic of the South Korean stock market that reacts sensitively to changes in the global macroeconomic environment.

Next year's stock market performance will hinge on whether major companies will be able to register better earnings in the coming year or not, it added.

The investment bank has thus lowered its investment rating on the South Korean market to "marketweight" from "overweight."

Morgan Stanley has also cut its Kospi target for the coming year to 3,000 from the previous forecast of 3,250, citing its faster retreat than other stock markets.

South Korea's stock market is expected to face several headwinds next year, including the down cycle of the global memory chip market and upward inflationary pressure following the central bank's shift to a tight monetary policy, it pointed out.

Macquarie Securities, meanwhile, has retained its Kospi target of 3,200 for next year despite downside risks, including South Korea's economic slowdown, according to the sources. (Yonhap)