Korean Stock Market's Correlation with Nasdaq Nears Two-Year High, Becoming a Barometer for Global AI Investment Sentiment

Odaily News As the correlation between the South Korean stock market and US tech stocks continues to strengthen, global fund managers are increasingly viewing the Korean market as a leading indicator for gauging AI investment sentiment. It has become a new norm to monitor the pre-market movements of Korean tech giants like Samsung Electronics and SK Hynix.

Data shows that the 60-day correlation coefficient between the Korea Composite Stock Price Index (KOSPI) and the Nasdaq 100 Index has risen to 0.46, approaching its highest level in two years and roughly three times the five-year average of 0.16. Notably, during market downturns, the Nasdaq's sensitivity to KOSPI movements increases significantly, with the relevant indicator reaching its highest level since 1990 on the 7th of this month.

Driven by concerns over AI demand prospects, the KOSPI plunged nearly 9% on the 13th of this month, dragging SK Hynix's ADR down over 9% and contributing to a broad decline in the US semiconductor sector. Institutional sources including J.P. Morgan Asset Management and PineBridge noted that global investors now use the Korean market to assess risk appetite in the AI sector, even tracking SK Hynix ADR and related ETF performance after the Korean market closes.

Ivan Feinseth, Chief Investment Officer at Tigris Financial Partners, stated that the Korean market, along with the Nasdaq and the Philadelphia Semiconductor Index, has formed a core coordinate system for global tech stock volatility. Samsung Electronics, SK Hynix, and the KOSPI are becoming "pre-market indicators" for risk appetite in the US AI and semiconductor markets.

However, since its June peak, the KOSPI has fallen by a cumulative 25%, wiping out approximately $1 trillion in market value. Both Samsung Electronics and SK Hynix shares have dropped over 30% from their highs. Leveraged trading has amplified market volatility, making the South Korean stock market one of the most volatile among major global indices. (Bloomberg)