Korea Chip Rally Drives Global ETF Demand

Hong Kong’s CSOP Asset Management is actively preparing to introduce an expanded suite of exchange-traded funds (ETFs) focused on South Korean equities later this year. This strategic move comes as Seoul’s robust stock market rally continues to fuel significant global investor demand for exposure to Asia’s top-performing major market.

Industry reports released Sunday indicate that CSOP is advancing plans to list an ETF meticulously tracking the benchmark Kospi 200 index on the Hong Kong Stock Exchange during the second half of this year. This eagerly anticipated product is poised to become the inaugural overseas-listed ETF designed to track Korea’s leading blue-chip index, thereby offering offshore investors a more direct and efficient pathway into the vibrant Korean market.

The impending launch will notably expand the specialized, yet rapidly growing, portfolio of overseas financial products linked to Korean shares. This trend is largely driven by tech giants Samsung Electronics and SK Hynix, which have firmly established Korea as a global hub for the most closely observed AI and memory-chip investments.

Last year, CSOP successfully pioneered the world’s first leveraged and inverse products specifically tracking these two dominant Korean chipmakers. According to insightful data from Samsung Securities, CSOP’s leveraged ETF dedicated to SK Hynix has witnessed its net assets soar to nearly 10 trillion won (approximately $662.2 billion), boosted by an additional 1.2 trillion won influx this year alone. Similarly, its leveraged Samsung Electronics ETF commands close to 3 trillion won in net assets, consistently achieving an impressive daily trading volume averaging 660 billion won.

“While investment strategies in Korea have traditionally focused on MSCI Korea, the introduction of a dedicated Kospi 200 ETF is poised to significantly enhance global investors’ accessibility to the dynamic Korean stock market,” commented Lim Eun-hye, a senior analyst at Samsung Securities. She further added, “Demand for direct Korean exposure is expected to intensify, particularly among discerning Hong Kong pension funds and institutional investors.”

This robust investment demand is now strategically extending into the United States, where Korea’s influential chip manufacturing giants are generating substantial and accelerating ETF interest.

Just last month, Leverage Shares, a prominent Connecticut-based asset manager specializing in single-stock and thematic exchange-traded products, successfully listed the innovative Roundhill Memory ETF. This memory chip-themed product prominently features Samsung Electronics and SK Hynix, which together constitute approximately half of its underlying holdings. Launched at $27.76 on the New York Stock Exchange on April 2, the ETF has since demonstrated remarkable growth, nearly doubling its value to $52.82 by Friday’s close. Its total net assets have impressively exceeded $10 billion.

Further solidifying this trend, Leverage Shares’ esteemed affiliate, Themed ETFs, is also diligently preparing to unveil a new fund. This upcoming fund is ingeniously designed to deliver twice the daily performance of the Roundhill Memory ETF, according to a preliminary prospectus meticulously filed with the US Securities and Exchange Commission earlier this month.

The filings explicitly detail that this proposed fund, tentatively named the Leverage Shares 2X Long Memory Daily ETF, comes with a clear warning: it is “not suitable for all investors.” This cautionary note underscores the inherent higher risk associated with highly leveraged overseas Korea trade opportunities, particularly as investor interest expands beyond conventional passive exposure.

Concurrently, leading Korean brokerages are also gearing up to introduce the nation’s inaugural single-stock leveraged and inverse products this month, responding to surging domestic investor demand. Approximately eight firms are slated to list roughly 16 new ETFs, specifically linked to Samsung Electronics and SK Hynix, on Wednesday.

jwc