Korean ETF Market Surges on AI and Semiconductor Themes; Energy and Defense Retrace
Over the past week, the Korean exchange-traded fund (ETF) market experienced a strong rally driven by AI technology and semiconductor material, parts, and equipment sectors. The 'ACE Korea AI Tech Core Industry' ETF stood out, delivering a remarkable 33.70% weekly return and ranking first in the industry. This fund's portfolio is heavily weighted towards major players such as Samsung Electro-Mechanics (35%), SK Hynix (16.1%), and Samsung Electronics (11.0%). The automotive sector also saw notable gains, with the 'SOL Automobile Material Fn' ETF jumping 29.28%, reinforcing the dominant trend in AI and semiconductors.
In contrast, there was a correction in AI power infrastructure, defense, and crude oil sectors, as profit-taking emerged among investors. Power infrastructure ETFs dropped as much as -14.29%, while defense and oil themes underperformed due to geopolitical concerns and changes in global supply-demand dynamics. Market analysts attribute these rapid sector rotations to shifts in individual investors' strategies, particularly the utilization of long-term and tax-saving accounts.
The average return for domestic equity funds stood at a robust 5.01%, yet small- and mid-cap stocks as well as KOSDAQ issues continued to be sidelined. International equity funds recorded a 2.85% average return, with Japanese and European indices also rallying on the back of AI-related stocks. Overall, the prominence of AI and semiconductor themes alongside sectoral corrections is shaping investor sentiment and capital flows across the market.
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