The Kospi index's recent surge, which has seen it nearly double since the beginning of the year, is largely driven by the performance of Samsung Electronics and SK Hynix, which together account for over half of the index's weighting.
Despite the index's rise of more than 20% in the past month, only 42% of the index's constituents are above their 200-day moving averages, indicating a significant breadth deterioration. Krinsky warns that this concentration risk could lead to a swift downside reversal, especially as only four out of 19 industry groups are currently positive, with ten groups down by 5% or more.
The strong performance of SK Hynix, which has seen its shares surge approximately 250% year-to-date, is attributed to increased demand for high-bandwidth memory chips used in AI applications. Samsung Electronics also crossed the $1 trillion market capitalization mark, highlighting the significant impact these two companies have on the overall market dynamics in South Korea