Kaushik
Equity Research Writer for Wiseman Capital
Korean equities' bigger picture is concerning because breadth has collapsed, with the KOSPI held up only by two stocks that make up half the index. The KOSDAQ has erased all its gains since April 2025 and trades near six-year lows, while the KOSPI is down 46% in six weeks after twice testing its 200-day average. A short-term bounce of about 20% to fill this week's gap is possible. x.comÂ
The PCE release will knock the bottom out of the KOSPI. The index already looks about to erase yesterday's gains. x.comÂ
Korean equities have a central role in the AI trade because Samsung and SK hynix supply most of the memory it needs. Despite the shakeout, the KOSPI leads the major markets shown at roughly +36% this year. The bullish lean faces a flow warning: Korean semiconductor ETF 20-day flows fell from nearly +$4B in June to about -$703M by October 18 as the index approaches rising support. x.com x.com x.com x.com x.comÂ
Korean equities are correcting like an altcoin after moving like one, going from euphoria to a bear market in barely a month. A rush of new investors, leverage and AI-chip hype drove the KOSPI up too fast, and much of the drop is that excess being flushed out, with war fears and rising oil adding pressure. x.comÂ
Korea's KOSPI is dangerously concentrated, with Samsung and SK hynix making up 54% of the index, and a 90% rise in six months looks like euphoria and a top. Per @epictrades1, citing Korea's Financial Supervisory Service, over 1.2 million leveraged retail accounts faced margin calls by July 13, and roughly 320,000-360,000 were forcibly liquidated. Index dominance by so few stocks works until it doesn't, and latecomers become exit liquidity. x.com x.com x.com x.comÂ
Korean equities look very attractive precisely because nobody trusts them right now. x.comÂ
South Korean equities look like a bubble about to burst because the KOSPI's 3.5x rise in 12 months, from 2,500 to above 8,500, rests on just two companies, Samsung and SK hynix. An index that concentrated is a trade, not a market, and parabolic trades like this break hard. x.comÂ
Korean equities look exposed because the won's collapse is part of the AI crisis, even as many investors have recently become interested in the KOSPI and SK Hynix. Per @GlobalMktObserv, foreign investors have sold KOSPI stocks for nine straight sessions, with $3.4 billion of outflows in one day concentrated in tech, and year-to-date foreign outflows near a record $55 billion, bought by domestic retail investors. x.comÂ
Korean equities' July leverage-driven flush increasingly looks like exhaustion, not a failed AI thesis. The KOSPI rose 3.56% to 6,813, back in bull-market territory more than 20% above its July low, with Samsung up over 5% and SK hynix nearly 8% on reported sovereign-wealth interest and reaccelerating global AI capex. Korean semiconductor exports are running up 155% year over year in early August. x.comÂ
Korean equities have become essentially a two-stock index, and conditioned dip-buying there will eventually end in a lot of pain. Since March the KOSPI has drawn down 20%, 8%, 13%, 17% and now 13%, rebounding quickly each time, which trains investors to buy every dip. That can keep working, possibly for years, until the last time, and no one knows when that will be. Buying because it worked last time is not a strategy. x.comÂ