To The Moon

The KOSPI Index previously fell nearly 40% from its peak. As forced liquidation pressure gradually fades, the sell-off in Korean equities appears to be nearing an end. Korean stocks seem to have entered a technical bull market, and this rally may have considerable staying power.

Why do I think this technical bull market in Korean stocks could last for quite some time? There are several reasons.

1. The AI semiconductor cycle is still in an upswing

The KOSPI is highly dependent on memory-chip giants Samsung Electronics and SK hynix, which together account for roughly half of the index’s weight. $三星电子(SSNLF)$ $ $SK海力士(SKHY)$

Boosted by Nvidia’s latest earnings report, which showed stronger-than-expected growth, both companies led gains in the Korean market on Thursday. This suggests that the AI semiconductor industry remains in an expansionary phase.

2. Foreign capital outflows are stabilizing

Foreign capital, which had been flowing out of Korea for much of 2026, has now begun to stabilize.

The large-scale deleveraging that previously weighed on Korean technology stocks and the broader AI infrastructure sector appears to have largely run its course. Meanwhile, many emerging-market fund managers remain underweight Samsung Electronics and SK hynix relative to their benchmark weights.

3. Korean equities are now trading at extremely compressed valuations

The recent correction has significantly reduced valuations across the Korean market. The KOSPI currently trades at around 12.2 times earnings, while its forward P/E ratio is only about 5.4 times.

Those who argue that Korea’s leading memory-chip companies have already become too expensive are overlooking an important fact: almost all of the KOSPI’s gains over the past year have been driven by earnings growth rather than valuation expansion.

4. Capital discipline could support a structural valuation re-rating

Capital discipline will determine whether this cycle repeats the extreme boom-and-bust patterns of previous semiconductor cycles.

SK hynix has pledged to return more than 50% of its cumulative free cash flow generated between 2025 and 2027 to shareholders, while major manufacturers are also locking in demand through long-term supply agreements.

There are growing signs that Korean semiconductor companies could use the current earnings peak to improve earnings visibility, potentially driving a structural valuation re-rating.

5. Demand-side signals remain strong

Demand indicators also support this view. Nvidia’s CFO expects fiscal 2028 revenue growth of around 70%, far above the market consensus of roughly 45%.

More importantly, she indicated that Nvidia could grow even faster if supply constraints did not exist. This reflects continued tightness in the memory-chip supply chain and suggests that Korean suppliers still possess strong pricing power.

6. SK hynix’s operating profit could exceed market expectations

Against the backdrop of strong semiconductor demand, SK hynix’s operating profit also has the potential to outperform market expectations.

Overall, I remain very optimistic about the potential valuation recovery in Korean equities. At these levels, if you are not getting on board now, then when?

Korean ETF Picks

In terms of investment vehicles, I prefer Korean ETFs over buying SK hynix directly.

For one thing, SK hynix and Samsung Electronics together account for around half of the exposure in many Korean equity ETFs. At the same time, Korea also has globally competitive companies outside the memory-chip sector, particularly in industries such as defense. Exposure to these companies can help diversify some of the risks associated with an AI-heavy portfolio.

1. KORU

Expense ratio: 1.32%
Net assets: $1.55 billion
10-year annualized return: 4.8%

KORU is a 3x leveraged Korea ETF designed to deliver approximately three times the daily performance of the MSCI Korea Index.

Its volatility and risk are extremely high. It is primarily intended for short-term trading rather than conventional long-term investing. $3倍做多韩国ETF-Direxion(KORU)$

2. EWY

Expense ratio: 0.59%
Net assets: $27.36 billion
10-year annualized return: 14.4%

EWY is one of the most representative Korea-focused ETFs listed in the U.S. market. It primarily tracks large- and mid-cap Korean companies, with significant exposure to Samsung Electronics and SK hynix.

It is suitable for investors seeking broad exposure to the Korean equity market while maintaining substantial exposure to the technology and semiconductor sectors. $韩国ETF-iShares MSCI(EWY)$

3. FLKR

Expense ratio: 0.09%
Net assets: $1.66 billion
10-year annualized return: 12.8%

FLKR is a low-cost ETF tracking the Korean equity market. Its holdings include major Korean companies such as Samsung Electronics, SK hynix, Hyundai Motor, and leading financial institutions.

Its main advantage is its low expense ratio, making it more suitable for long-term exposure to the Korean market. $Franklin FTSE South Korea ETF(FLKR)$

4. MKOR

Expense ratio: 0.79%
Net assets: $137,000
10-year annualized return: 12.6%

MKOR is an actively managed Korean equity ETF. Rather than simply replicating an index, its fund managers actively select Korean-listed companies.

Its portfolio remains focused on Korea’s key sectors, including technology, industrials, and financials, making it suitable for investors seeking potential excess returns through active stock selection. $Matthews Korea Active ETF(MKOR)$

5. 07709

Management fee: 1.60% per year
Net assets: $8.18 billion

07709 uses SK hynix (000660.KS) as its underlying asset and, under normal market conditions, seeks to provide up to 2x the daily performance of SK hynix.

The fund primarily achieves its leveraged exposure through derivatives such as swaps. $南方东英SK海力士每日杠杆最多 (2x) 产品(07709)$

6. 07747

Management fee: 1.60% per year
Net assets: $34.28 billion

07747 uses Samsung Electronics (005930.KS) as its underlying asset and, under normal market conditions, seeks to provide up to 2x the daily performance of Samsung Electronics.

The fund mainly uses a synthetic replication strategy through swaps to achieve its leveraged exposure.$南方两倍做多三星电子(07747)$