The wave of AI investment has deeply intertwined the fortunes of US tech giants with South Korea's memory chip makers, making Wall Street's tech stock fluctuations increasingly synchronized with the Korean stock market. According to data from Rayliant, the 60-day correlation between the Korea Composite Stock Price Index (KOSPI) and the Nasdaq 100 has recently climbed to about 0.50, the highest level since 2021.
This growing link reflects the rising weight of Samsung Electronics and SK Hynix in the KOSPI, which together account for over half of the index's market capitalization. Both companies are central to the AI hardware supply chain, supplying critical memory chips for data centers operated by US tech giants. "The correlation is rising because the KOSPI has become a semiconductor index," said Rolf Bulk, an analyst at Futurum Group, via email. Samsung and SK Hynix are increasingly dependent on the capital expenditures of the same hyperscalers that drive earnings for US semiconductor and tech companies. Bulk estimates that data center demand now accounts for more than half of global DRAM demand this year, up from about 40% last year, and expects this proportion to rise further. DRAM (dynamic random access memory) is an essential component in AI servers.
This linkage allows Asian investors to gauge the strength of the global AI trade ahead of Wall Street's opening. "Samsung and SK Hynix provide the first liquid market reaction to dynamics affecting global AI demand overnight," said Jung In Yun, founder of Fibonacci Asset Management. "SK Hynix, in particular, has become a key barometer due to its exposure to high-bandwidth memory (HBM), one of the most critical components in the AI supply chain."
Recent trading has confirmed this trend. On July 13, the KOSPI fell more than 8%, dragged down by a 15% plunge in SK Hynix and its record decline. The Nasdaq 100 fell 1.88% that day, with major tech stocks broadly lower, including Micron Technology down 4%, SanDisk plunging 12%, and Intel falling 6%.
Key factor driving the shift
Peter Kim, head of global investment strategy at KB Financial Group, noted that the rally in South Korean memory chips started later than the Nasdaq because US investors initially focused more on hyperscalers. However, the magnitude and volatility of the recent rally have prompted global investors to view South Korea as a barometer for the broader AI trade. Samsung's earnings guidance also provides early signals of AI demand conditions each quarter, as the company typically reports earnings about two weeks before major US semiconductor companies. Analysts caution, however, that US and Korean tech stocks are moving in tandem rather than one consistently leading the other. "The outlook for US and Korean tech stocks is increasingly driven by the same underlying factor: market sentiment toward AI hardware trades," said Phillip Wool, head of research at Rayliant Global Advisors. When AI-related news breaks during US market closures, Samsung and SK Hynix can serve as "proxy indicators" for how investors might react when Wall Street reopens. Conversely, when news occurs during US trading hours, the Nasdaq provides a preview for the next Korean stock trading day.
Risks of the closer link
The increasing correlation carries risks. Industry veterans agree that the rising correlation is eroding the diversification benefits traditionally gained by holding both US and Korean stocks. "South Korea no longer offers a hedging diversification effect against US tech stocks. When half of an index is tied to a cyclical theme, a slowdown in hyperscaler capital expenditure would hit the Korean market far harder than most others," Bulk said. He added that Korean memory stocks are inherently more volatile than many US chip stocks, with leveraged ETF flows further amplifying their swings. Wool emphasized that as the AI theme increasingly dominates the drivers of both Korean and US tech stocks, investors are losing one of the core reasons for holding both markets: geographic diversification. "When all these markets are essentially driven by the same big risk factor, you find yourself losing the 'international diversification' benefit you originally sought by spreading investments across different regions like the US and Korea," Wool said.
Potential for divergence over time
That said, greater divergence could emerge over time. Kim pointed out that Micron, Samsung, and SK Hynix currently benefit from synchronized DRAM price increases, but differences in capital expenditure, product mix, and US policy support for domestic chip production could eventually lead to performance divergence among the three companies.
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