Korean Stocks Hit Another all-time high, with South Korea ETFs Surging over 34% YTD!
Incredible! The South Korean market rallied sharply again today, with the KOSPI index jumping over 2.6% to fresh record highs! Its year-to-date gain has already exceeded 30%, making it the world's best-performing stock index:
The chart below shows the KOSPI index trend since 1980:
South Korea ETFs have performed even more impressively. $iShares MSCI South Korea ETF(EWY)$ has surged over 34% YTD, $Franklin FTSE South Korea ETF(FLKR)$ has gained over 33%, while the 3x leveraged South Korea ETF— $Direxion Daily MSCI South Korea Bull 3x Shares(KORU)$ —has skyrocketed over 127%!
Investors who bought South Korea ETFs have truly hit the jackpot!
What's driving such ferocious momentum in South Korean stocks?
Based on recent developments, memory chip giant $Micron Technology(MU)$ soared 10% overnight. The company announced it has already shipped $HBM4 (High Bandwidth Memory) to customers and expects Q1 sales to ramp up smoothly—a quarter ahead of schedule!
Additionally, the company stated that its 2026 HBM products are already sold out! And it anticipates supply shortages will persist beyond 2026!
HBM production is squeezing capacity for other memory products, causing across-the-board price increases in memory chips. In this space, Micron, SK Hynix, and Samsung collectively dominate nearly 90% of market share!
$SK Hynix, Inc.(HXSCL)$ $CSOP SK Hynix Daily (2x) Leveraged Product(07709)$ and $SAMSUNG ETFS TR.(SGCRF)$ $CSOP Samsung Electronics Daily (2x) Leveraged Product(07747)$ are the two largest companies by market cap on the Korean exchange, with a combined valuation exceeding $1.1 trillion—accounting for over 33% of South Korea's total stock market capitalization!
Spurred by Micron's overnight surge, Samsung Electronics jumped over 6% today, also hitting new all-time highs! SK Hynix gained over 3.3%:
Beyond benefiting from memory chips, South Korea's third-largest company by market cap, Hyundai Motor, is the controlling shareholder of Boston Dynamics. Following Boston Dynamics' stunning performance at this January's CES exhibition, Hyundai Motor has transformed into a robotics concept stock, soaring 71% year-to-date!
Beyond excessive weighting of mega-caps, South Korean companies also hold extensive cross-shareholdings. For example, SK Square—South Korea's sixth-largest company by market cap—is a major shareholder of SK Hynix, having gained nearly 44% this year; Kia Corporation—the seventh-largest—is a subsidiary of Hyundai Motor, while also holding a small stake in Hyundai, with gains exceeding 32% YTD; Samsung C&T, valued at $36.7 billion, also holds a minor stake in Samsung Electronics, surging over 31%:
Beyond riding the AI wave, with rising global military spending, the Russia-Ukraine war, and Middle East tensions in recent years, South Korean defense exports have exploded. Related listed companies have become hot sectors in the Korean market, such as Hanwha Systems jumping 86% YTD and Korea Aerospace Industries gaining over 42%!
Amid these tailwinds, the South Korean market is also undergoing reforms, striving to improve corporate governance and eliminate valuation discounts relative to other markets!
One must admit, in the current era (AI revolution, humanoid robot wave, new round of military expansion), South Korean stocks truly enjoy the perfect confluence of favorable timing, advantageous positioning, and popular support!
Even with the KOSPI index approaching 5,500, Wall Street remains optimistic about its trajectory this year. JPMorgan expects it could rise as high as 7,500—representing 36% upside from current levels!
Sojung Park, portfolio manager at Matthews Asia, stated: "While the discount has narrowed somewhat, I believe there remains significant valuation gap in South Korean equities!"
From a P/E valuation perspective, KOSPI's forward multiple stands at 9.5x, below Taiwan's 17x and Japan's 17.9x. From a P/B standpoint, KOSPI trades at 1.7x, also below both Taiwan and Japan:
South Korea is absolutely crushing it!
Related ETFs:
The most well-known and largest South Korea ETF is $iShares MSCI South Korea ETF(EWY)$ . $Franklin FTSE South Korea ETF(FLKR)$ offers the lowest management fees. $PLUS Korea Defense Industry Index ETF(KDEF)$ has a defense-heavy tilt. KORU is a leveraged product.
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