With the arrival of the KOSPI 7000 era, interest in Korea's stock market is growing among overseas retail investors. They are going beyond simply buying Samsung Electronics or SK hynix to study Korea's uniquely complex ownership structures and craft investment strategies.
Recently on X, an overseas investor shared SK Group's complex ownership chart and offered the analysis that "with a single SK share, you can enjoy the effect of indirect investment in SK hynix and SK Telecom."
The investor highlighted as a practical investment point the vertically integrated structure in which SK has SK Square and SK Telecom as subsidiaries, and SK Square in turn owns SK hynix. The investor noted, "What's striking is that with one SK share you can own both the growth potential of SK hynix and the potential of Anthropic at the same time." In 2023, SK Telecom invested $100 million in U.S. AI startup Anthropic, securing about 0.3% equity.
In fact, on the back of SK hynix's record-setting surge, the share prices of holding company SK Square and SK are rallying in tandem. As SK hynix's stock climbed steeply, investors chose the holding companies as alternatives with relatively lower price burdens.
However, there is also a sober assessment that the real value of Anthropic embedded in a single SK share is minimal. The market instead sees SK hynix's value and whether a holding company discount applies as having a bigger impact on SK's share price.
In particular, Korean holding companies often fail to fully reflect gains in subsidiary value. Over the past year, buoyed by the AI semiconductor boom, SK hynix's share price jumped about eightfold from 190,800 won to 1,654,000 won as of the previous day, but SK, the holding company, rose by less than half that rate. Even though the subsidiary's share price has already climbed far above the holding company's, the market is still applying a holding company discount.
By contrast, in periods of market correction, holding companies often swing more. When the KOSPI plunged in March amid the U.S.-Iran war fallout, SK hynix fell about 24% while SK Square dropped 28%. This is seen as reflecting both the decline in subsidiary value and concerns about a holding company discount.
While Korea's distinctive and complex valuation framework remains unfamiliar to foreigners, the threshold for overseas retail investors to enter the Korean stock market has paradoxically fallen to an all-time low.
In August last year, Hana Securities began the first integrated account transactions with Hong Kong's Emperor Securities, and recently Samsung Securities partnered with U.S. brokerage Interactive Brokers (IBKR) to begin pilot operations of an integrated account service in the U.S. market.
Expectations are rising among overseas investors as well. On Reddit, the largest U.S. online community, posts appeared such as "IBKR has started supporting direct transactions on the Korea Exchange (KRX)" and "What is SK hynix's ticker code?" Recently, posts comparing the price-to-earnings ratios (PER) of SK hynix and Micron or certifying revenue from trading SK hynix global depositary receipts (GDR) have also been appearing in succession.
Previously, for an overseas retail investor to trade Korean stocks, they had to complete a foreign investor registration (IRC) and open an account directly with a domestic securities firm. Alternatively, they could only invest indirectly through the iShares MSCI South Korea (EWY) exchange-traded fund (ETF) listed on the NYSE Arca. However, if the integrated account service launches officially, orders for SK hynix could be placed directly through IBKR.
In particular, with the restriction on who can open integrated foreign investor accounts abolished in January this year, and with news of the Samsung Securities–IBKR service supply added, some analysts say a structural shift could occur in foreign fund flows.
Kang Jin-hyeok, an analyst at Shinhan Investment & Securities, said, "In the past, foreign fund flows were a closed, institution-centered market, led by pension funds and hedge funds. Now, access through global brokers has improved, and combined with an SNS-based investing culture, the structure is changing to include retail money."
Kang added, "Greater openness and tradability could lead to speculative money, such as a tilt toward some meme stocks or wider volatility. The globalization of KOSPI is welcome, but we cannot view it as entirely positive."