To The Moon

After suffering a historic selloff, South Korean equities quickly rebounded. On March 5, the KOSPI briefly touched 5,700 intraday before closing at 5,583.9, gaining about 9.6% for the day, the largest increase since 2008. Just one day earlier, the index had plunged more than 12%, marking the biggest single-day drop in its history.

From the ETF performance perspective, Korea-related ETFs generally moved higher alongside the market rebound. $韩国ETF-iShares MSCI(EWY)$ rose 1.53% on the day, $Franklin FTSE South Korea ETF(FLKR)$ gained 1.05%, and $Matthews Korea Active ETF(MKOR)$ increased 1.45%, while the triple-leveraged Korea ETF $Direxion Daily MSCI South Korea Bull 3x Shares(KORU)$ surged 4.38%, reflecting the amplified impact of index rebounds on leveraged products. The defense-focused ETF $PLUS Korea Defense Industry Index ETF(KDEF)$ rose 4.77% in overnight trading.

The most direct driver of the rebound came from South Korea’s two semiconductor giants. After 9:00 a.m. on March 5, Samsung Electronics and SK Hynix rallied sharply, with intraday gains at one point exceeding 13% for both companies. Together they account for nearly 40% of the KOSPI index, and their simultaneous surge quickly lifted the benchmark, marking the turning point from panic selling to a broad market rebound.

The rise in semiconductor stocks is closely tied to the continued strengthening of demand across the AI supply chain. On the evening of March 4, market reports indicated that U.S. chip giant Broadcom was expanding orders for high-bandwidth memory (HBM) used in AI server products. SK Hynix is currently one of the world’s core HBM suppliers, and the news directly prompted capital to flow back into South Korea’s semiconductor sector.

SK Hynix plays a particularly important role in the AI supply chain. Since 2025 the company has been steadily expanding production capacity for HBM3E and has become a key memory supplier for Nvidia’s AI GPUs. Market expectations broadly suggest that HBM demand will continue to grow rapidly in 2026, and once panic selling eased, investors moved quickly to rebuild positions in leading semiconductor companies.

Samsung Electronics is also benefiting from expanding memory demand driven by AI. The company is accelerating development of HBM3E and next-generation HBM4 products while increasing advanced packaging capacity. Concentrated capital inflows during early trading on March 5 helped Samsung’s share price rebound rapidly, making it one of the most important stabilizing forces behind the KOSPI’s recovery.

Policy measures also helped stabilize market sentiment. On March 5, President Lee Jae Myung stated during an emergency cabinet meeting that the government would deploy financial stabilization tools worth around 100 trillion won to address market volatility, roughly equivalent to about 4% to 5% of South Korea’s total stock market capitalization. The measures include bond market stabilization funds, corporate financing support tools, and potential stock market stabilization actions if needed. At the same time, the Korea Exchange activated its program trading stabilization mechanism, briefly triggering a circuit breaker at 9:06 that paused program trading.

Although the index rebounded strongly, investors are still assessing the impact of the earlier selloff. The sharp volatility in South Korean equities this week was primarily triggered by rising oil prices caused by the Middle East conflict, which subsequently led to a global risk-asset correction. Because margin trading is relatively high in Korea, market swings were significantly larger than in other Asian markets.

Even after the week’s sharp decline and rebound, South Korean equities have maintained strong performance this year. The Kospi index is still up more than 30% year-to-date, with semiconductor companies remaining the largest contributors. Future market direction will likely depend heavily on the AI computing cycle and global technology investment demand.

South Korea related ETFs:

$韩国ETF-iShares MSCI(EWY)$ is the largest broad-based Korea ETF, with approximately $17.93 billion in assets under management and an expense ratio of 0.59%. The fund holds 83 stocks covering major Korean blue-chip companies and serves as the primary vehicle for global investors allocating to the Korean equity market. $Franklin FTSE South Korea ETF(FLKR)$ has about $5.53 billion in assets and charges an expense ratio of only 0.09%, one of the lowest among Korea ETFs. It holds 155 stocks with greater diversification, making it more suitable for long-term, low-cost exposure to Korean equities.

$Direxion Daily MSCI South Korea Bull 3x Shares(KORU)$ is a triple-leveraged ETF providing three-times exposure to the Korean market. It manages about $1.066 billion in assets and charges a 0.75% expense ratio. The portfolio is highly concentrated and primarily designed for short-term trading rather than long-term investment.

$PLUS Korea Defense Industry Index ETF(KDEF)$ is a defense-sector thematic ETF focused on South Korea’s military and defense supply chain. It has approximately $164 million in assets under management and an expense ratio of 0.65%.

$Matthews Korea Active ETF(MKOR)$ is an actively managed Korea ETF with about $114 million in assets and an expense ratio of 0.79%. It seeks to allocate capital to core growth companies in the Korean market through active stock selection.