South Korean stocks tumble as chip selloff spreads to Asia
South Korean stocks tumbled as a semiconductor selloff spread from Wall Street to Asia, dragging the KOSPI down 7.89%. SK Hynix fell 10.23% and Samsung Electronics lost 8.03%. U.S.-listed South Korea-focused ETFs, including EWY and KORU, also declined.
*this image is generated using AI for illustrative purposes only.
South Korean stocks tumbled Thursday as a broad semiconductor selloff spread from Wall Street to Asia, dragging the Korea Composite Stock Price Index lower after heavy losses in SK Hynix Inc and Samsung Electronics Co. The decline followed a sharp semiconductor selloff on Wall Street overnight after reports that Meta Platforms Inc was exploring a cloud business to sell excess artificial intelligence computing capacity.
The selloff puts U.S.-listed South Korea-focused ETFs in focus, including the iShares MSCI South Korea ETF (NYSE: EWY), Direxion Daily South Korea Bull 3X ETF (NYSE: KORU) and Franklin FTSE South Korea ETF (NYSE: FLKR). These funds provide exposure to South Korean equities, with significant holdings in the country's largest semiconductor makers.
iShares MSCI South Korea ETF (NYSE: EWY)
The fund is the largest U.S.-listed fund focused on South Korean equities, providing exposure to some of the country’s biggest companies like SK Hynix and Samsung Electronics. The fund has approximately $24.85 billion in assets under management and charges an expense ratio of 0.59%.
EWY closed 8.12% lower on Wednesday at $185.50 and lost a further 8.64% in extended trading. It has gained 81.47% so far this year and 157.82% over the past 52 weeks.
Direxion Daily South Korea Bull 3X ETF (NYSE: KORU)
KORU seeks three times leveraged exposure to South Korean equities through holdings in EWY, providing leveraged exposure to the country’s largest semiconductor makers. The fund has $3.40 billion in assets under management and charges an expense ratio of 0.85%.
KORU fell 7.66% on Wednesday at $213.09 and fell another 0.17% in after-hours trading. Year-to-date, the fund has gained 187.69% and 636.48% over the past year.
Franklin FTSE South Korea ETF (NYSE: FLKR)
FLKR tracks large and mid-cap South Korean companies and carries an expense ratio of 0.09%. It has $1.32 billion in assets under management. FLKR closed 7.52% lower on Wednesday at $61.11. So far this year, it has gained 82.91% and 149.33% over the past year.
Chip Selloff Weighs On KOSPI
South Korea’s KOSPI, the world’s best-performing major stock index this year, tumbled 7.89% on Thursday. KOSPI has gained 83.08% so far this year and 156.58% over the past 52 weeks. SK Hynix fell about 10.23%, while Samsung Electronics lost 8.03% at publication time.
| Security | Intraday | 5-Day | 1 Month |
|---|---|---|---|
| SK Hynix | Down 14.57% | Down 23.26% | Down 7.33% |
| Samsung Electronics | Down 9.06% | Down 19.21% | Down 20.67% |
| EWY | Closed 8.12% lower on Wednesday | Down 11.37% | Down 13.53% |
| KOSPI | Down 7.89% | Down 13.22% | Down 13.10% |
| Nikkei 225 | Down 2.47% | Down 3.99% | Up 3% |
| Nasdaq Composite | Closed 0.66% lower on Wednesday | Up 1.23% | Down 3.89% |
| S&P 500 | Closed 0.22% lower on Wednesday | Up 1.06% | Down 1.66% |
On Wednesday, the Dow Jones Industrial Average slipped 0.03% to 52,305.24, while the S&P 500 fell 0.22% to 7,483.23 and the Nasdaq declined 0.66% to 26,040.03.
How will Meta's potential entry into the cloud AI market impact the long-term demand for South Korean semiconductor chips?
What measures might South Korean semiconductor companies take to mitigate the effects of increased competition in the AI cloud space?
Could this selloff present a buying opportunity for investors, or are further declines expected in the near term?
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