To The Moon

South Korean equities have roared into 2026. The KOSPI is up more than 17% year-to-date, leading global markets and emerging as one of the standout performers worldwide.

Korea-focused ETFs have done even better. The 3x leveraged $Direxion Daily MSCI South Korea Bull 3x Shares(KORU)$ has surged over 65% so far this year, the largest Korea ETF $iShares MSCI South Korea ETF(EWY)$ is up 19%, and Hong Kong–listed 7709 $CSOP SK Hynix Daily (2x) Leveraged Product(07709)$ has climbed about 30%.

A market dominated by three names

Unlike the US or A-shares, Korea’s market is extremely concentrated. Total market cap is about US$3 trillion, but $CSOP Samsung Electronics Daily (2x) Leveraged Product(07747)$ , $SK Hynix, Inc.(HXSCL)$ and $Hyundai Motor Co., Ltd.(HYMPY)$ together are worth over US$1 trillion—more than one-third of the entire market.

In effect, the KOSPI is tied to semiconductors—and more precisely, to memory chips.

AI boom fuels a memory super-cycle

Explosive AI demand has driven memory prices sharply higher. $CSOP Samsung Electronics Daily (2x) Leveraged Product(07747)$ ‘Q4 revenue came in at about KRW 93 trillion, up 23% year-on-year and above expectations. Operating profit hit KRW 20 trillion, a 208% jump and well ahead of consensus.

Micron says the memory shortage worsened over the past quarter and calls the current undersupply “unprecedented”, expecting tight conditions to persist beyond 2026.

According to $Cabana Target Leading Sector Aggressive ETF(CLSA)$ ’s head of Korea research, hyperscale cloud providers are aggressively buying $Dataram(DRAM)$ and paying premiums to lock in capacity. He estimates that in Q4, average $Dataram(DRAM)$ prices rose about 30% quarter-on-quarter, while $NANDASOFT(08045)$ flash prices gained around 20%. Prices are expected to stay elevated this year and next, and could remain high into the first half of 2027.

Counterpoint Research forecasts DDR5—the latest $Dataram(DRAM)$ standard—will see prices jump about 40% quarter-on-quarter this quarter, with a further 20% rise likely in Q2.

The memory market is an oligopoly: $SK Hynix, Inc.(HXSCL)$, $CSOP Samsung Electronics Daily (2x) Leveraged Product(07747)$ and $Micron Technology(MU)$ dominate the space. Only these three supply $HudBay Minerals(HBM)$ for AI servers. $SK Hynix, Inc.(HXSCL)$projects the $HudBay Minerals(HBM)$ market will grow at a 33% compound annual rate from 2025 to 2030.

Put together, memory chips appear to be entering a historic super-cycle. With two of the three global memory leaders listed in Seoul, Korea is one of the cleanest equity plays on the AI theme.

$Hyundai Motor Co., Ltd.(HYMPY)$ : from carmaker to “tech” story

Korea’s third-largest company, Hyundai Motor, has rallied even more aggressively. Its share price is up about 88% year-to-date, and its market cap has surpassed General Motors.

The key catalyst: Boston Dynamics’ Atlas robot demonstration at CES in early January. With high mobility, industrial-grade perception and manipulation, automated battery swapping and water resistance, Atlas quickly went viral.

Many investors may not realise Boston Dynamics is a Hyundai subsidiary. Atlas is expected to start work in Hyundai factories from 2028 and now integrates technology from Google DeepMind—further boosting the narrative.

The result: Hyundai is increasingly being valued less as a traditional automaker and more as a tech-driven mobility and robotics play. Analysts have been steadily raising their target prices.

Policy support and valuation discount

Beyond the “big three”, policymakers are trying to make the market more attractive—pushing companies to improve shareholder returns and clearing out zombie firms.

Valuations remain supportive. On standard metrics, Korean equities still trade at a discount to the global average.

No surprise, then, that the Korea Exchange CEO has floated a KOSPI target of 6,000 points (vs about 4,976 now), arguing that strengthened competitive advantages in semiconductors, defence and shipbuilding could drive a new wave of re-rating.

How can retail investors get exposure?

For most retail investors, ETFs are the easiest way to play Korea:

• $iShares MSCI South Korea ETF(EWY)$ : The largest Korea ETF, with around US$10 billion in assets. It offers strong liquidity and relatively low fees, with over US$1.1 billion in net inflows this year. Samsung Electronics, SK Hynix and Hyundai Motor together account for more than 48.6% of the fund.

• $Franklin FTSE South Korea ETF(FLKR)$ : A smaller ETF with roughly US$300 million in assets. Liquidity is lighter, but the expense ratio is just 0.09%, well below $iShares MSCI South Korea ETF(EWY)$’s 0.59%. Its holdings are more diversified across Korean equities.

• $PLUS Korea Defense Industry Index ETF(KDEF)$ KDEF: A focused ETF on the defence industry. In an environment of rising geopolitical tensions and expanding defence budgets, $PLUS Korea Defense Industry Index ETF(KDEF)$ is up more than 31% this year, outperforming $iShares MSCI South Korea ETF(EWY)$ . Its semiconductor exposure is limited, so if the AI trade unwinds, downside risk may be more contained.

• $Direxion Daily MSCI South Korea Bull 3x Shares(KORU)$ KORU: A 3x leveraged long ETF on Korean stocks. Because of its leverage, its price swings are extreme. It is designed for short-term trading, not long-term holding.