South Korean Stocks Plunge — Is This Bull Market Over?
The KOSPI Index has seen a rare and sharp selloff since reaching a high near 6,300 in late February. It now stands at around 5,791, with a single-day drop exceeding 7%, marking the steepest correction since August 2024. The previously strong rally, which had repeatedly broken through record highs, has suddenly hit the brakes in a very short period of time.
Reflected in ETFs, the largest Korea-focused fund $iShares MSCI South Korea ETF(EWY)$ dropped as much as 10.9% in pre-market trading, while $Franklin FTSE South Korea ETF(FLKR)$ fell 10.96%. The 3x leveraged product $Direxion Daily MSCI South Korea Bull 3x Shares(KORU)$ plunged 32.43% before the open, amplifying the sharp selloff in Korean equities.
This sharp selloff was driven by a double impact. The first trigger was geopolitical tension. After the US and Israel struck Iran, oil prices surged and global equities came under pressure. Capital quickly moved into safe-haven assets, and risk appetite declined. As a country heavily dependent on energy imports, South Korea faces rising cost concerns, prompting investors to sell first and reassess later.
The conflict also affected expectations for rate cuts. Higher oil prices could reignite inflation, potentially delaying the Federal Reserve’s easing cycle. The loose liquidity expectations that had supported tech stocks began to weaken, leading to tighter positioning and a shift in sentiment from optimism to caution.
A more structural reason was the overheated semiconductor rally. As of February 26, 2026, year-to-date gains were extraordinary: SK Hynix had surged 163.57% and Samsung 173.87%, making them the biggest drivers of the Korean market’s rise. But precisely because they rose so sharply, valuations became stretched, making them vulnerable to pullbacks at the first sign of external shocks.
Samsung Electronics and SK Hynix carry extremely heavy weights in the KOSPI. Together they account for nearly half of the index’s influence. When both stocks drop, the index can hardly remain stable. This time, each fell around 15% in a single session, and the KOSPI inevitably followed lower.
Their price-to-book ratios over the past five years:
Red – SK Hynix White – Samsung Electronics
This decline reflects a combination of external shocks from Middle East tensions and a natural pullback after an extended rally in major tech names. Foreign investors have begun locking in profits, while retail traders are stepping in to buy the dip. The market has entered a more volatile phase, with swings becoming noticeably larger.
So here’s the question: Is this the end of the Korean equity rally, or a fresh entry opportunity? Share your thoughts in the comments — standout responses will be rewarded with Tiger Coins.
Related ETF overview:
$iShares MSCI South Korea ETF(EWY)$ has assets of approximately $17.9 billion with an expense ratio of 0.59%. Its holdings are centered on South Korea’s largest companies, with Samsung Electronics and SK Hynix representing the highest weightings in the portfolio.
$Direxion Daily MSCI South Korea Bull 3x Shares(KORU)$ has assets of approximately $1.07 billion and charges an expense ratio of 0.75%. Its underlying structure is similar to a broad Korea index, but it uses leverage to amplify daily moves. As a result, performance is heavily dependent on Samsung and SK Hynix, with semiconductor exposure playing a dominant role.
$Franklin FTSE South Korea ETF(FLKR)$ manages about $550 million in assets and has a very low expense ratio of 0.09%. Its holdings are broadly similar to mainstream Korea index ETFs, but the key advantage lies in its cost efficiency.
$Amplify Samsung SOFR ETF(SOFR)$ has around $398 million in assets and charges 0.20%. Its portfolio is clearly tilted toward Samsung-affiliated companies, with Samsung Electronics carrying a very high weight. Compared with broad-based ETFs, it is more concentrated and more sensitive to movements in a single large-cap name.
$Matthews Korea Active ETF(MKOR)$ has approximately $115 million in assets and an expense ratio of 0.79%. Its holdings do not strictly mirror index weightings and place greater emphasis on technology and growth-oriented stocks. Semiconductor exposure remains relatively high, but the structure is more flexible.
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While the 7.24% single-day plunge on 3 March 2026 is the sharpest correction since August 2024, most market analysts view this as a volatile "reset" rather than the end of the long-term bull market.
The current drop to 5,791.91 follows a historic rally where the KOSPI surged nearly 50% year-to-date and hit an all-time high of 6,347 in late February.
AI Semiconductor Supercycle: Samsung and SK Hynix remain the global leaders in High Bandwidth Memory (HBM). Even with recent price slides, their 2026 earnings projections have been upgraded due to "uncontrollable" demand for AI infrastructure.
The consensus is that the market is "flushing out" excess leverage (seen in the 32% drop of KORU) and overheated valuations. While the immediate outlook is volatile, the "AI + Reform" theme continues to support a long-term upward trajectory.