TL;DR
The Korean market is now setting the global AI mood. The Kospi-Nasdaq ratio has nearly tripled. SK Hynix’s US listing extended Korea’s exposure to 24-hour trading.
Fund managers in London, New York and Tokyo have added a new step to their morning routine: South Korea stock check. Korea’s $4 trillion stock market now offers an early read on global AI risk appetite, as SK Hynix and Samsung fluctuate among their worldwide chip stocks. “Now we are all Korean investors,Hani Redha, the portfolio manager of PineBridge Investments in London said. JPMorgan Asset Management’s chief market strategist for Asia made a presentation on Korea to the firm’s global team for the first time in his 14-year career.
The data confirms this. The 60-day correlation between the Kospi and the Nasdaq 100 rose to 0.46, near a two-year high and almost triple the five-year average of 0.16. The correlation is even stronger during the sell-off: The Nasdaq 100’s sensitivity to the Kospi hit its highest level since 1990 on July 7, when the Korean market was weak. SK Hynix joined the trillion dollar club earlier this yearand its U.S. holdings already extend Korea’s influence into Wall Street trading hours. Redha follows Seoul, then SK Hynix’s ADRs, then its Korea-focused ETFs in New York. “It’s almost like 24 hour tracking,” he said.
Influence comes at a cost. The Kospi has become one of the world’s most volatile major benchmarks, with leveraged single-stock products fueling swings. Monday’s sell-off, fueled by skepticism about demand for artificial intelligence, sent SK Hynix’s U.S. shares down 9.3%, sending the Kospi down nearly 9%, spilling over into Wall Street. Kospi has lost 25% since its June peak, losing $1 trillion in value. South Korea has temporarily suspended new listings of single-stock ETFs to curb speculation.
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The benchmark is still up 62% for the year. South Korea has earmarked $880 billion over ten years for chips, artificial intelligence data centers and robots.and Samsung and SK Hynix control the majority of global memory chip supply. As long as this supply bottleneck persists, Korea’s sentiment-driven trading will continue to set the tone for every AI stock that depends on it. “This is the new normal that investors must embrace as the AI rally continues.” said Chisa Kobayashi at UBS.The question is whether the market in Seoul, driven by retail leverage, will be the one to tell London what to think about artificial intelligence.
