Trading in Korea's semiconductor exchange-traded fund (ETF) market is shrinking quickly. As individual investors increasingly choose to invest in flagship semiconductor stocks such as Samsung Electronics and SK hynix instead of ETFs that diversify across the broader semiconductor sector, trading value for semiconductor ETFs listed in Korea has dwindled to one-quarter in two months.
According to the Korea Exchange (KRX) on the 24th, the one-day transaction value for 55 semiconductor-related ETFs listed in Korea totaled 2.071 trillion won as of the 23rd. That is down 76.7% from May 29 (8.9088 trillion won) two months earlier.
Total assets under management (AUM) including both domestic and overseas semiconductor ETFs fell 12.6% (7.8343 trillion won) over the same period, from 62.0734 trillion won to 54.2391 trillion won.
The contraction in trading was especially notable for ETFs that focus on domestic semiconductor corporations. The flagship product "TIGER Semiconductor TOP10" saw its one-day transaction value drop 68.3% from 1.4914 trillion won at the end of May to 472.4 billion won on the 23rd of this month. Most major products also saw sharp declines in transactions, including "SOL AI Semiconductor TOP2 Plus" (-78.8%), "KODEX Semiconductor" (-91.5%), and "HANARO Fn K-Semiconductor" (-86.2%).
Leveraged products seeking high risk and high return were no exception. Transaction values for "KODEX Semiconductor Leverage" and "TIGER Semiconductor TOP10 Leverage" fell 92.1% and 93.0%, respectively, over the same period, as investor fervor cooled quickly.
In the securities industry, this is interpreted as the stock market's leadership concentrating extremely in the top-tier large caps such as Samsung Electronics and SK hynix.
In fact, AUM for 16 single-stock leveraged ETFs on Samsung Electronics and SK hynix jumped 81.9% in two months. Transaction value also rose 41.5%, showing a trend opposite to semiconductor ETFs.
Experts said that as expectations grow that the benefits from expanded artificial intelligence (AI) investment will concentrate in large memory semiconductor corporations, funds are shifting to flagship stocks instead of ETFs that include small and mid-sized materials, parts, and equipment.
An asset management industry official said, "Individual investors' strategies are shifting quickly from 'diversified investment' to 'concentrated investment,'" and added, "As expectations grow that the benefits of expanded artificial intelligence (AI) investment will concentrate in large memory semiconductor corporations such as Samsung Electronics and SK hynix, more investors are choosing leveraged ETFs that track twice the returns of core stocks rather than ETFs that cover the entire semiconductor sector."
However, some analysts note that the trading slowdown does not immediately translate into pessimism about the semiconductor cycle.
Seol Tae-hyeon, a DB Securities researcher, said, "Despite the recent price correction, cumulative fund inflows continue in the global and domestic semiconductor ETF markets," and added, "Domestic AI Semiconductor theme ETFs are also raising rebound expectations as bargain-hunting inflows continue, centered on HBM (high bandwidth memory) and K-semiconductor materials, parts, and equipment, which recently saw steep declines."