Buoyed by expectations for strong earnings at Samsung Electronics and SK hynix, the KOSPI surged in May, but the share prices of many listed companies, excluding the two stocks, actually retreated. With an extreme, semiconductor-centric tilt persisting, concerns are growing about heightened market volatility.
According to the Korea Exchange (KRX) on the 2nd, the KOSPI200 equal-weight index fell 2.52% over the past month (May 4–June 1). This contrasts with the KOSPI200 index's 34.95% surge over the same period.
The equal-weight index is calculated by assigning the same weight to every constituent regardless of its market capitalization. Unlike standard indexes that are driven by market-cap size, it shows the average price trend of individual stocks. In other words, a decline in the equal-weight index means that the share prices of many stocks, excluding a few mega-caps such as Samsung Electronics and SK hynix, were actually weak.
In fact, the recent KOSPI advance is effectively being led by Samsung Electronics and SK hynix. The two stocks' KOSPI weighting, which was about 40% at the start of the year, surpassed 50% as of the previous day. Specifically, Samsung Electronics is at 29.23% and SK hynix at 24.12%, bringing their combined share to 53.35%.
Accordingly, voices of warning are growing in and around the securities industry that the semiconductor tilt has reached a critical point, raising the risk that even a small shock could shake the entire market significantly. Kim Jun-young of iM Securities said, "In May, Korea's stock market showed an extreme tilt toward semiconductors, automobiles, and IT hardware," and added, "If the trend turns, the pullback could widen quickly in a short period."
In particular, some point out that supply–demand concentration has strengthened since the advent of single-stock leveraged exchange-traded funds (ETFs). In fact, leveraged ETFs for Samsung Electronics and SK hynix drew several trillion won in net individual buying within just a few days of launch. When investor funds flow in, ETF managers must buy more of the underlying cash equities, which can create a self-reinforcing structure that leads to further share-price gains.
Shinhan Investment & Securities said in a recent report that "the thesis of structural earnings growth for assets benefiting from AI capex expansion and bottlenecks remains valid," but also noted, "Given the high likelihood that liquidity conditions will tighten further, sticking with existing holdings and buying on pullbacks in a partitioning manner is more appropriate than chasing rallies."
Still, some say the current semiconductor-led rally is not merely a liquidity-driven market but is based on expectations for earnings improvement, leaving room for further gains. According to LS Securities, the 12-month forward price-earnings ratio (PER) is 6.6 times for Samsung Electronics and 6.9 times for SK hynix, lower than the KOSPI average of 8.4 times.
This kind of market concentration is not unique to Korea. According to The Wall Street Journal (WSJ), in the U.S. market, the top 10 stocks—including Nvidia, Microsoft, Apple, Amazon, Alphabet, and Meta—account for 43.2% of the S&P 500. In Taiwan's market, Taiwan Semiconductor Manufacturing Co. (TSMC) makes up about 44%. Analysts say concentration around large-cap AI beneficiaries is deepening across global markets.