Recent data indicates that the correlation between South Korea's Kospi and the U.S. Nasdaq 100 has reached its highest level since 2021, at approximately 0.50. This trend reflects the growing influence of major Korean memory chip manufacturers, Samsung Electronics and SK Hynix, which together represent over half of the Kospi index.
As these companies are integral to the AI hardware supply chain, their fortunes are increasingly tied to the spending patterns of U.S. tech giants. Analyst Rolf Bulk noted that demand for data center memory chips has surged, with data centers now accounting for more than half of global DRAM demand, up from around 40% last year.
This shift allows investors in Asia to gauge the strength of global AI demand ahead of U.S. market openings. Notably, SK Hynix has emerged as a key indicator due to its exposure to high-bandwidth memory, essential for AI applications. The interconnectedness was evident on July 13, when a significant drop in SK Hynix's stock led to a corresponding decline in the Nasdaq.
Experts like Peter Kim from KB Financial Group have observed that while the Korean memory chip market has started to rally, it initially lagged behind U.S. tech stocks, which were more focused on hyperscaler investments. However, as the AI theme increasingly drives both markets, the traditional diversification benefits of holding U.S. and Korean equities are diminishing.
Analysts warn that a slowdown in hyperscaler capital expenditures could disproportionately impact the Korean market, which is heavily reliant on this cyclical theme. Furthermore, the volatility of Korean memory stocks, exacerbated by leveraged ETF flows, raises concerns for investors.
While current trends show a shared benefit from rising DRAM prices, differences in capital expenditures and product offerings may lead to divergent performances in the future. Additionally, the rise of Chinese memory chip producers poses an emerging risk, as evidenced by the significant debut of Changxin Technology Group on the Shanghai STAR Market