South Korea’s Kospi recently hit an all-time high, but the index appears to be overly reliant on two heavyweights — Samsung Electronics and SK Hynix — according to BTIG analyst Jonathan Krinsky in a note. “We get the fundamentals around memory are robust, but the concentration risk of this index has become increasingly outsized when relying on just two names,” Krinsky said. The iShares MSCI South Korea ETF is “set to gap up again into trendline resistance,” he said. “It’s been a hard trend to fight, but given the increasingly obvious breadth deterioration, we would be on guard for a swift downside reversal in this ETF.” Samsung Electronics and SK Hynix make up approximately more than half of the weighting in the Kospi while only 42% of constituents are above their 200-day moving averages, he said, “so we have a situation where the majority of names are not just lagging the index, but actually moving in the opposite direction.” And while the Kospi has risen more than 20% in the past month, just four of 19 industry groups are positive — and 10 of the groups are down 5% or more, he noted. South Korea’s Kospi has nearly doubled since the start of the year, data from LSEG shows. SK Hynix’s shares, which have surged approximately 250% year-to-date, saw the company’s market capitalization exceed $1 trillion. The gains have been supported by rising demand for high-bandwidth memory chips used in AI servers and accelerators. Samsung Electronics crossed the $1 trillion mark earlier this month , becoming the second Asian company to do so after Taiwan Semiconductor Manufacturing Co. — CNBC’s Lee Ying Shan contributed to this report.
