TL;DR
The Korean market now sets the global sentiment on AI. The Kospi-Nasdaq correlation has almost tripled. SK Hynix’s IPO in the United States expanded Korea’s influence into 24-hour trading.
Fund managers in London, New York and Tokyo have added a new step to their morning routine: Checking South Korean stocks. Korea’s $4 trillion stock market now offers an early read on global AI risk appetite, as swings in SK Hynix and Samsung weigh on chip stocks around the world. “We are all Korean investors now.“said Hani Redha, portfolio manager at London-based PineBridge Investments. JPMorgan Asset Management’s chief Asian market strategist presented on Korea to the firm’s global team for the first time in his 14 years in the role.
The data confirms it. The 60-day correlation between the Kospi and the Nasdaq 100 has risen to 0.46, near the highest level in two years and nearly triple its five-year average of 0.16. The link is even stronger during sell-offs: the Nasdaq 100’s sensitivity to the Kospi during periods of Korean market weakness reached the highest level since 1990 on July 7. SK Hynix joined the trillion dollar club earlier this yearand its U.S.-listed stocks now extend Korea’s influence into Wall Street trading hours. Redha tracks Seoul, then SK Hynix ADRs, then Korea-focused ETFs in New York. “It’s like a follow-up of almost 24 hours,” said.
Influence has a cost. The Kospi has become one of the most volatile major benchmarks in the world, and single-stock leveraged products amplify the swings. A Monday sell-off driven by skepticism over AI demand triggered a Kospi drop of nearly 9% that spread to Wall Street, dragging US shares of SK Hynix down 9.3%. The Kospi has fallen 25% from its June high, a drop of $1 trillion. South Korea temporarily halted new listings of leveraged ETFs of individual stocks to curb speculation.
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The benchmark index is still up 62% so far this year. South Korea pledged $880 billion over a decade for chips, AI data centers and robotsand Samsung and SK Hynix control most of the world’s supply of memory chips. As long as that supply bottleneck remains, Korea’s sentiment-driven trading will continue to set the tone for all AI stocks that depend on it. “This is the new normal that investors must accept, as the AI rally continues,“said Chisa Kobayashi of UBS. The question is whether a retail leverage-driven market in Seoul should be the one telling London what to think about AI.
