Korea’s AI chip market is now the opening bell for global stocks

Fund managers in London, New York, and Tokyo have added a new step to their morning routine: checking South Korean stocks. Korea’s $4 trillion equity market is now offering an early read on global AI risk appetite, as swings in SK Hynix and Samsung ripple through chip stocks worldwide. “We are all Korean investors now,” said Hani Redha, a London-based portfolio manager at PineBridge Investments. JPMorgan Asset Management’s chief Asia market strategist presented on Korea to the firm’s global team for the first time in his 14 years on the job.

The data confirms it. The 60-day correlation between the Kospi and the Nasdaq 100 has climbed to 0.46, near the highest in two years and almost triple its five-year average of 0.16. The linkage is even stronger during selloffs: the Nasdaq 100’s sensitivity to the Kospi during periods of Korean market weakness hit the highest level since 1990 on July 7. SK Hynix joined the trillion-dollar club earlier this year, and its US-listed shares now extend Korea’s influence into Wall Street trading hours. Redha tracks Seoul, then SK Hynix’s ADRs, then Korea-focused ETFs in New York. “It’s like almost 24-hour tracking,” he said.

The influence comes with a cost. The Kospi has become one of the world’s most volatile major benchmarks, with leveraged single-stock products amplifying swings. A Monday selloff driven by scepticism about AI demand triggered a near 9% Kospi drop that spilled into Wall Street, dragging SK Hynix’s US shares down 9.3%. The Kospi has tumbled 25% since its June peak, a $1 trillion wipeout. South Korea temporarily halted new listings of single-stock leveraged ETFs to curb the speculation.

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The benchmark is still up 62% for the year. South Korea committed $880 billion over a decade to chips, AI data centres, and robots, and Samsung and SK Hynix control the majority of global memory chip supply. As long as that supply bottleneck holds, Korea’s sentiment-driven trading will keep setting the tone for every AI stock that depends on it. “This is the new normal investors have to accept, as long as the AI rally continues,” said Chisa Kobayashi at UBS. The question is whether a market driven by retail leverage in Seoul should be the one telling London what to think about AI.