KOSPI rally sparks overseas demand for Korean ETFs
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KOSPI’s strong rally has fueled growing demand among overseas investors for exchange-traded funds (ETFs) offering exposure to Korean equities, industry officials said Wednesday.
Korea’s benchmark index has been setting successive record highs, driven largely by gains in semiconductor shares, and is now delivering standout returns among global equity markets.
One notable example is the rapid inflow into the Roundhill Memory ETF (DRAM), a semiconductor-focused fund launched on April 2 on the New York Stock Exchange by U.S. asset manager Roundhill. The ETF attracted more than $1.11 billion in net inflows as of April 21, less than a month after its release.
The ETF is heavily concentrated in Korea’s major chipmakers, Samsung Electronics and SK hynix. As of April 21, SK hynix accounted for 26.9 percent of the portfolio and Samsung Electronics 23.4 percent, meaning the two together make up more than half of the fund.
The rapid rise of the fund is widely seen as unusual for a relatively small asset manager.
An official in the asset management industry said, “The product’s appeal likely lies in offering global retail investors, who previously had limited access to Korean semiconductor equities, an indirect way to gain exposure.”
Foreign demand for Korean equities is also evident in broader ETF flows.
According to ETF Check, a platform operated by Korea Securities Computer Corp. (KOSCOM), overseas investors bought a net 510.1 billion won ($345 million) worth of Mirae Asset Global Investments’ TIGER MSCI Korea TR ETF over the past month. This accounts for about 73 percent of the 695.7 billion won recorded over the past year, indicating a sharp concentration of inflows in a short period.
Similarly, Samsung Asset Management’s KODEX MSCI Korea TR ETF recorded 91.2 billion won in foreign net inflows over the same period.
Both ETFs track the MSCI Korea index, suggesting that foreign investors are broadly optimistic about Korean equities amid the ongoing market rally.
An illustration generated with ChatGPT
As global appetite grows, Korean asset managers are stepping up their overseas expansion strategies.
Hanwha Asset Management is making its first push into the Middle East, planning to cross-list its PLUS Korea Defense Industry Index (KDEF) ETF on the Abu Dhabi Securities Exchange after its listing in New York.
It also plans to launch a new ETF in the second half of the year, the PLUS Korea Manufacturing Core Alliance Index (KMCA), which will focus on export-driven sectors such as semiconductors, batteries, shipbuilding and defense.
Mirae Asset Global Investments has already built a strong global presence through its Global X ETF brand. With total ETF assets nearing 400 trillion won, more than half is now sourced from overseas.
Samsung Asset Management had acquired a 20 percent stake in U.S. ETF manager Amplify in 2022. Since then, it has been exporting Korea-proven ETF strategies to the U.S. market, further extending its global reach.