Wall Street Pours Into Korean Stocks as Samsung, SK Hynix Lead AI Trade

Wall Street Takes Another Look at the Kospi

Cheaper Than Micron, Korean Chip Stocks Draw Global Money

218 ETFs Hold Samsung Electronics

ETF Market Reorients Around Semiconductors

South Korea’s stock market has extended its rally, with the Kospi nearing the 8,000 level, as money from New York hedge funds and US retail investors flows into Korean equities, according to foreign media reports. Wall Street is revisiting the market as Samsung Electronics Co. and SK Hynix Inc., buoyed by high-bandwidth memory demand, are being re-rated as leading AI plays in global capital markets.

Nikkei reported on May 14 in an article headlined “Wall Street Is Falling for Korean Stocks” that the popularity of Korean culture is visible across New York, from music and food to cosmetics. That enthusiasm has spread to Wall Street, where US investors are showing strong appetite for Korean shares.

The newspaper said rising memory-chip prices tied to the expansion of the AI industry helped drive shares of SK Hynix and Samsung up nearly threefold over the past year. Even after that rally, the two companies trade at about six times forward earnings, versus roughly nine times for US rival Micron Technology Inc., making them attractive on valuation.

Interest in Korean equities is also growing across the investment industry. Eduardo Marques, chief executive officer of UK asset manager Percent Partners, told Nikkei he is “addicted” to finding hidden value opportunities in Korean stocks. Jonathan Lennon, CEO of US asset manager Pleasant Lake Partners, pointed to large performance bonuses at Samsung and SK Hynix and said the payouts could total about $40 billion, equal to several percentage points of South Korea’s gross domestic product. He added that the bonuses could have an unprecedented spillover effect on the country’s consumer market.

US retail money is also flowing into Korean stocks. A memory-chip exchange-traded fund launched by US asset manager Roundhill in early April attracted more than $6 billion in its first month. Samsung and SK Hynix make up nearly half of the fund, according to the report. Interactive Brokers Group Inc. also began allowing direct trading in Korea Exchange-listed stocks on May 7.

In South Korea, the continued rise in Samsung and SK Hynix shares has fueled demand for semiconductor-themed ETFs. Asset managers are increasing the weighting of the two stocks and broadening product lineups with bond-mix and covered-call strategies. As of May 14, 218 of the 1,107 ETFs listed in South Korea held Samsung, with estimated holdings of 45.8447 trillion won, according to Koscom ETF Check. A total of 203 ETFs held SK Hynix, with estimated holdings of 44.7755 trillion won.

Investor inflows have also been strong. SOL AI Semiconductor TOP2 Plus ranked second among all ETFs over the past month after drawing net inflows of 1.1918 trillion won. As of May 14, the fund held SK Hynix with a 27.89% weighting and Samsung with a 19.68% weighting.

RISE Samsung Electronics SK Hynix Bond Mixed 50 ranked third with net inflows of 883.9 billion won. The ETF allocates about 50% to bonds and 25% each to Samsung and SK Hynix. Other funds, including TIGER Semiconductor TOP10 Covered Call Active and KODEX Semiconductor, also ranked among the top after drawing net inflows of 495 billion won and 440.4 billion won, respectively, over the past month. With a single-stock leveraged ETF tied to Samsung and SK Hynix due to launch later in May, semiconductors may take up an even larger share of the ETF market.

Kang Kyung-ju, Hankyung.com reporter, qurasoha@hankyung.com