Samsung Electronics and SK hynix, which drove the KOSPI 7000 era, are shaking up the structure of Korea's stock market beyond simply leading it. From the ETF market to foreign inflows and index volatility, the market as a whole is effectively being reorganized around the two stocks.
◇ ETFs are packed with Samsung and Hynix… Similar-theme competition stirs controversy
First, the ETF market's concentration in "Samjeon-nix" is steepening. Of the 49 new ETFs listed this year, 14 (29%) have Samsung Electronics and SK hynix as core assets. Products are pouring out to ride the semiconductor duo's soaring share prices. On the 22nd, even single-stock leveraged ETFs that track each of the two stocks at 2 times are slated to debut. The heat is intense, with 10,000 people signing up in a week just for the pre-education required to trade the products.
But the overheated product race is creating side effects of market distortion. Shinhan Asset Management promoted that it raised SK hynix exposure to 40% when launching "SOL AI Semiconductor TOP2 Plus," but the actual inclusion weight was only 24%. After criticism that it caused an "optical illusion" by adding in the weight of the holding company SK Square, the company belatedly corrected the figures and bowed its head.
◇ The semiconductor top two diverged a year ago… Now, "everyone" buys both
The structure of foreign inflows is also changing. In the past, foreign funds were spread across various industries beyond semiconductors, but recently they have been concentrating on Samsung Electronics and SK hynix.
As recently as a year ago, fortunes diverged between Samsung Electronics and SK hynix. In May last year, SK hynix ranked No. 1 in net foreign buying, while Samsung Electronics was No. 1 in net foreign selling. The gap in high-bandwidth memory (HBM) competitiveness within Nvidia's supply chain had an impact. SK hynix was the first in the industry to supply HBM3E 8‑stack and 12‑stack products, lifting market expectations, while Samsung Electronics at the time had not passed Nvidia's quality test.
At the start of this year, the situation changed. Samsung Electronics and SK hynix were absent from the top net foreign buys, and funds were dispersed to names related to bio, shipbuilding, defense, and nuclear power such as NAVER, Hanwha Ocean, Celltrion, and Samsung Heavy Industries. As profit-taking continued on semiconductor stocks that had surged early in the year, a rotational market appeared centered on sectors drawing attention from domestic and external events and policy expectations.
Recently, however, the flow has shifted to buying Samsung Electronics and SK hynix at the same time. As war fears eased and the KOSPI's uptrend resumed, the two stocks took the top two spots in net foreign buying. On the 4th, foreigners made a net purchase of 2.0822 trillion won in SK hynix, and the day before, a net purchase of 3.5676 trillion won in Samsung Electronics, both the largest net foreign buys on record.
◇ Market cap No. 1 swings 10% in a day… The short-term pace is a burden
Volatility among the top market-cap stocks has also changed from the past. Previously, the No. 1 market-cap stock acted as the market's pillar and showed a stable pattern, but recently there have been frequent cases of swings of more than 10% in a single day.
In fact, Samsung Electronics jumped 14.41% in a single day the previous day, the biggest gain in about 24 years since December 2001 during the dot-com bubble. SK hynix also rose 23.82% over the past week (Apr. 30–May 6), more than doubling the KOSPI's gain (10.37%). After dipping below 1.3 million won late last month, the share price soared intraday to 1,729,000 won that day, setting an all-time high. As Samsung Electronics and SK hynix's share of KOSPI market cap has nearly doubled in a year, the structure in which the two stocks' moves dictate the index's overall volatility is becoming entrenched.
Heo Jae-hwan, a researcher at Eugene Investment & Securities, said, "Most sectors outside semiconductors are failing to keep up with the KOSPI's rise, and only one-third of the overall market is setting new highs for the year," and noted, "Given that the gap between the current KOSPI and its 200-day average has widened to dot-com bubble levels, the burden from the short-term pace of gains needs to be considered."