Bloomberg reported on the 19th (local time) that the Korea stock market, which has a high weight of artificial intelligence (AI)-related stocks, is emerging as a leading indicator of global investor sentiment.
Bloomberg said that the $4 trillion Korea stock market, once seen as a peripheral market by many global investors, is now serving as a barometer of investor sentiment.
It added that amid the AI frenzy, swings in Samsung Electronics and SK hynix have spread across global chip stocks, making the Korea stock market the earliest gauge of risk appetite in world markets.
In fact, among fund managers in London, New York and Tokyo, checking the Korea stock market before starting transactions has become the new routine. Andrew Jackson, head of Japan equity strategy at Ortus Advisors, added the KOSPI chart as a key watch for the first time in his more than 20-year career early this year.
Herald van der Linde, head of Asia-Pacific equity strategy at HSBC, said, "These days Korea is discussed in every meeting." Hani Reda, a portfolio manager at PineBridge Investments in London, also said, "Now we are all Korea investors," noting that he checks the Korea stock market every morning to gauge AI investor sentiment.
There is also a phenomenon in which global AI-related stock transactions continue around the clock centered on the Korea stock market. After the Korea market closes, SK hynix American depository receipts (ADR) traded on the New York stock market and Korea-related exchange-traded funds (ETF) pick up investor interest.
The impact on global markets has been even greater when the Korea stock market falls. During periods of weakness in Korea stocks, the sensitivity of the Nasdaq 100 to KOSPI moves surged to the highest since 1990 on the 7th. However, Bloomberg noted that if a sharp decline in the Korea market persists, this influence could weaken again.
The linkage between the Korea and U.S. stock markets is also evident in statistics. According to Bloomberg data, the 60-day correlation between the KOSPI and the Nasdaq 100 is 0.46, approaching the highest level in the past two years. That is roughly three times the five-year average of 0.16.
Ivan Pinesus, chief investment officer (CIO) at Tigris Financial Partners, said, "Korea has effectively been incorporated into the same volatility ecosystem as the Nasdaq and the Philadelphia Semiconductor Index," adding, "SK hynix, Samsung Electronics and the KOSPI now serve as pre-market indicators of U.S. AI- and semiconductor-related risk."