South Korean semiconductor TOP2 exchange-traded funds (ETFs) posted losses exceeding 20% from July 1 to July 8, underperforming both the KOSPI index and the KRX Semiconductor Index during the market correction period. The concentrated investment strategy in Samsung Electro-Mechanics and SK Square, alongside Samsung Electronics and SK hynix holdings, amplified losses as these stocks experienced steeper declines than the two semiconductor giants. Industry analysts and asset management firms maintain positive outlooks on Samsung Electro-Mechanics and SK Square despite the recent volatility.
TOP2 ETFs Record Steeper Losses Than Benchmark Indices
According to Korea Exchange data, SOL AI반도체TOP2플러스 recorded a return of -23.6% from July 1 to July 8, ranking near the bottom among non-leveraged products. ACE K반도체TOP2+ and KODEX AI반도체TOP2플러스 also declined over 20% during the same period. The KOSPI fell 12.3% and the KRX Semiconductor Index dropped approximately 19% over the same timeframe, indicating that TOP2 ETFs experienced greater losses than benchmark indices.
Concentrated Holdings in Four Stocks Drive Volatility
These ETF products feature elevated exposure to Samsung Electro-Mechanics and SK Square in addition to Samsung Electronics and SK hynix, with the four stocks comprising approximately 80% of portfolio weights. Samsung Electro-Mechanics fell approximately 26% during the July 1-8 period, while SK Square declined over 20%. These declines exceeded those of Samsung Electronics (-5%) and SK hynix (-11%).
The volatility of these ETFs increased correspondingly. SOL AI반도체TOP2플러스 has a 52-week beta value of 1.7, while HANARO Fn K-반도체 has a beta of 1.4. Beta values above 1 indicate greater price fluctuations than the market and are interpreted as higher risk. By comparison, KODEX 반도체, which holds a diversified portfolio of semiconductor stocks beyond Samsung Electronics and SK hynix, has a beta value of 1.06.
Analysts Maintain Positive Outlook on Portfolio Holdings
Both asset management firms and securities analysts maintain positive outlooks on Samsung Electro-Mechanics and SK Square. Samsung Electro-Mechanics target prices were raised in July, ranging from a minimum of 246 million won to a maximum of 300 million won.
An asset management industry official stated, "Expectations for semiconductor industry improvement remain valid, but ETFs with excessive concentration in specific stocks may experience higher volatility during correction phases even if returns are strong during uptrends." Lee Ju-hyung, a researcher at Eugene Investment & Securities, stated, "Samsung Electro-Mechanics' second-quarter earnings this year are estimated to exceed previous operating profit estimates by approximately 7.8%."
FAQ
What caused Korean semiconductor TOP2 ETFs to fall over 20% from July 1 to July 8?
The concentrated investment strategy in Samsung Electro-Mechanics and SK Square drove the losses, as these two stocks declined approximately 26% and over 20% respectively during the period, exceeding the declines of Samsung Electronics (-5%) and SK hynix (-11%).
How did TOP2 ETF performance compare to benchmark indices during the July 1-8 correction?
TOP2 ETFs underperformed benchmark indices, with products like SOL AI반도체TOP2플러스 falling 23.6% while the KOSPI declined 12.3% and the KRX Semiconductor Index dropped approximately 19% over the same period.
