Since the beginning of this year, as the prosperity of the global AI industry continues to rise, the Korean technology track has continued to attract global cross-border capital inflows with its own characteristics.
Against this background, on the one hand, fund companies continue to launch various Korean-themed ETFs, and on the other hand, active equity QDIIs also gradually increase their Korean positions.
In this regard, some insiders believe that the current valuation of Korean stocks is lower than that of US stocks, and combined with the long-term dividends of the global AI industry, the market has room for valuation repair.
However, in response to the recent hype of Korean themed ETF products, some fund companies have also begun to warn about investment risks.
Guotai Junan Securities recently wrote an article and analyzed that South Korea’s most intuitive impression on the global market recently is the record-breaking stock market and memory chip prices, which have become an indispensable part of the global AI industry chain.
However, behind this dazzling technological halo, it is actually the epitome of breaking the shackles of resources and completing industrial upgrading with difficulty.
Behind the continued prosperity of a few large companies such as Samsung and SK Hynix, the profit margins of Korean small businesses have always remained at a low level, and in recent years the trend has diverged from that of large companies, with pre-tax profit margins continuing to decline.
This means that the Korean economy is highly dependent on a few industries, has limited vitality, and is seriously lacking in resilience when encountering a downward economic cycle.
According to an analysis article by the Bank of Korea, the current Korean won foreign exchange market has shifted from being driven by trade in the early stage to being driven by cross-border asset investment.
Since the second half of last year, as South Korea’s stock market has continued to hit new highs, foreign institutions’ passive profit-taking in the stock market has caused unconventional short-term capital outflow pressure.
Judging from high-frequency data, the net selling of the Korean stock market by foreign-funded institutions accelerated in April and May.
This change in capital flow deserves attention.
On the one hand, the South Korean stock market attracts global capital inflows, reflecting its certain advantages and potential in the technology field, especially in memory chips related to the AI industry.
But on the other hand, short-term capital outflow pressure also highlights market uncertainty.
For investors, they need to carefully evaluate the investment value of the Korean market and not just be fooled by its superficial prosperity.
The current situation that South Korea’s economy relies on a few large enterprises and industries also makes its economic structure somewhat fragile.
Once these core industries are impacted, the entire South Korean economy may face greater challenges.
Short-term capital outflows from foreign institutions may further exacerbate market volatility.
In the future, the development trend of South Korea’s stock market and economy remains to be seen.
Governments and businesses need to take measures to increase the vitality and resilience of the economy and reduce dependence on a few industries.
At the same time, investors also need to pay close attention to market dynamics and take precautions against risks.
