Global capital is flowing on a massive scale towards South Korean chip manufacturing giants, whose share prices have been soaring relentlessly to record highs. This immense wave of investment targeting the Korean stock market is driving unusual volatility and trading volumes in cross-border exchange-traded funds (ETFs) worldwide. Undoubtedly, against the backdrop of the gradual collapse of "American exceptionalism," the market-wide chorus of "Sell America," and the vigorous global AI infrastructure boom, the Korean stock market, after a spectacular 75% surge in its benchmark index during 2025, continues to rank among the "world's most frenzied markets" in 2026. The benchmark KOSPI index has surged approximately 50% year-to-date, strongly outperforming global equity markets. The "Korean Wave" (K-Pop) influence has decisively moved from Seoul's fashion circles to global stock markets.
Driven powerfully by the strong performances of the South Korean and Taiwanese stock markets, global equities are experiencing a historic divergence: Asian markets are continuously achieving new milestones, significantly outperforming US stocks and developed market benchmark indices. The prevailing themes of "AI panic buying" and "AI disruption" are reshaping global investors' asset allocation logic, channeling institutional and retail capital away from the United States towards Asian equity markets, which are perceived as hosting the most concentrated list of participants in the AI computing power supply chain.
Recent data shows the MSCI Asia Pacific Index has climbed over 7% this month, marking its best February performance since its inception in 1998. Furthermore, the Korea Exchange has surpassed France to become the world's ninth-largest stock exchange. The current trading landscape strongly favors semiconductor and AI computing infrastructure stocks, rather than software companies, with the former predominantly located in Asian emerging markets.
A research note from Citrini Research, titled "A Future Memo on the AI Boom Crisis," reinforces a specific bet: because Asia hosts core chip manufacturers like TSMC and numerous other chip and AI infrastructure companies such as Foxconn, SK Hynix, and Samsung, the Asian AI computing infrastructure supply chain, led by South Korea and China, is poised to be the biggest winner in the "AI disruption" trend. In stark contrast, the US technology sector, with its higher exposure to software and light-asset business models, is experiencing turbulence.
The scramble for Korean chip stocks is evident in the latest statistics. During Thursday's US trading session, the iShares MSCI South Korea ETF, traded on US exchanges, saw its daily turnover skyrocket to a record $6.4 billion. Trading volumes for chip ETFs tracking Korean semiconductor stocks in the Hong Kong market are also rising rapidly. Concurrently, a China-South Korea semiconductor fund listed in the mainland A-share market was temporarily suspended on Friday due to soaring premiums caused by an influx of capital. These extreme trading anomalies highlight the immense scale of global investor demand for exposure to one of the world's hottest investment themes.
The KOSPI index has surged 50% this year, primarily driven by global investors rushing to buy shares in Samsung Electronics and SK Hynix, two of the most critical beneficiaries of the global AI infrastructure boom. Demand for DRAM/NAND memory chips remains robust, with prices for products like DDR4/DDR5 and data center-grade SSD series expanding aggressively. This is primarily because the deluge of AI computing demand has pushed the need for memory chips and their importance to AI training/inference systems to unprecedented levels. Global AI computing demand continues to exhibit exponential growth trends, with supply struggling to keep pace, as clearly demonstrated by the exceptionally strong recent financial results from TSMC, the "King of Chips," and ASML, the "King of Lithography."
Whether it's Google's massive TPU AI computing clusters or Nvidia's immense AI GPU clusters, all rely heavily on High Bandwidth Memory (HBM) systems fully integrated with AI chips. Furthermore, tech giants accelerating the construction or expansion of AI data centers must purchase server-grade DDR5 memory and enterprise-class high-performance SSDs/HDDs in vast quantities. Samsung Electronics, SK Hynix, and Micron Technology are strategically positioned across these three core memory segments: HBM, high-performance server DRAM (including DDR5/LPDDR5X), and high-end data center SSDs, making them the most direct beneficiaries of the "AI memory + storage stack" and allowing them to capture a "super红利" (super dividend) from the AI infrastructure wave.
The two South Korea-based memory chip giants, Samsung Electronics and SK Hynix, together account for nearly half of the weighting in the aforementioned iShares MSCI South Korea ETF. Propelled by the powerful bull market in these stocks, fueled by the "memory super cycle," global capital has flooded in, driving the ETF's price up by a remarkable 55% this year. In comparison, the S&P 500 has gained less than 1%, while the Philadelphia Semiconductor Index, a benchmark for US chip stocks, has risen 16%.
The demand for this Korean ETF does not solely reflect the risk appetite of US investors. According to Kang Jinhyeok, a senior analyst at Shinhan Securities, as short-term US dollar strength against the Korean won amplifies returns for US-listed Korean ETFs, South Korean retail investors and global hedge funds are increasingly purchasing these overseas-listed Korean ETFs. Simultaneously, investors focused on the Hong Kong market are actively buying leveraged ETFs linked specifically to the Korean chip sector. Notably, the CSOP SK Hynix Daily 2x Leveraged ETF, which offers twice the daily return of SK Hynix, recorded a record HK$2.4 billion (approximately $307 million) in turnover on Thursday, representing significant capital flow for the recently quiet Hong Kong market.
Investors in mainland China's A-share market are also piling in. A China-South Korea Semiconductor ETF was temporarily suspended after its premium over its net asset value soared to a record high exceeding 17%. This ETF holds Samsung, SK Hynix, and domestic Chinese chipmaker Cambricon among its primary holdings.
The core driver behind the Korean market's "spectacular surge" is not a broad global market rally, but rather the unprecedented "memory super cycle" supercharged by the AI infrastructure boom (South Korea is home to the two largest memory chip leaders, Samsung and SK Hynix), combined with global capital chasing leveraged exposure to chips across different markets. In other words, while superficially a national index, the KOSPI is increasingly behaving like a "Korean AI Chip Index" highly sensitive to global AI capital expenditure cycles.
Crucially, this is not merely market hype around an "AI grand narrative"; earnings, exports, and capacity expansion are all aligning positively for the Korean market. Survey data from February 27th indicated that South Korea's exports likely grew significantly for the ninth consecutive month in February, with semiconductor exports surging 134.1% year-on-year in mid-February. This signifies that the global AI infrastructure boom is genuinely translating into substantial orders and robust external demand for South Korea's memory chip chain. Meanwhile, SK Hynix announced this week plans to invest approximately 21.6 trillion won by 2030 to build new production lines in Yongin, essentially confirming with real capital that demand for HBM, data center-grade memory systems, and AI server clusters is not a short-term phenomenon but part of a new expansion cycle triggered by an unprecedented "memory super cycle."
The "reflexive accelerator" effect created by global capital flowing through ETFs and leveraged products is also a powerful catalyst for the Korean market's rapid ascent. The aforementioned data—record single-day turnover for the US-listed iShares MSCI South Korea ETF, record trading for the Hong Kong-listed 2x leveraged SK Hynix product, and the temporary suspension of a Shanghai-listed China-Korea semiconductor ETF due to excessive premium—collectively underscore that global capital is not slowly allocating to Korea, but is aggressively "scrambling for the Korean AI trade theme" using ETFs, leveraged ETFs, and cross-border funds worldwide. When the underlying asset weightings are heavily concentrated in Samsung and SK Hynix, the powerful resonance between passive and active leveraged funds further amplifies the Korean market's gains.
Furthermore, a frequently overlooked reason for the Korean market's continued global leadership after 2025 is its reevaluation based on "low valuation + governance discount repair," triggered by earnings upgrades from the AI-driven memory cycle. Analysis from Breakingviews points out that even after SK Hynix's stock surged 340% over the past year, its valuation remains at merely about 4 times expected 2027 earnings. Simultaneously, the Korean stock market has historically traded at a roughly 60% "Korea discount" compared to the US market. The recent passage of a corporate reform bill by the South Korean government aimed at improving shareholder returns adds significant potential for governance improvements and a re-rating of Korean equity valuations.
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