The KOSPI has emerged as a key driver of US stock market movements, particularly affecting the Nasdaq-100 index, according to analysis from Wall Street firms. Evercore ISI described the Korean stock market as a 'tail that wags the dog' scenario where KOSPI now moves global asset markets. The correlation coefficient between KOSPI and Nasdaq-100 recently reached 0.95, with investors treating Korean stocks as a proxy indicator for artificial intelligence investment sentiment. Analysts attribute this dynamic to memory semiconductors' critical role in AI supply chains, heavy concentration of semiconductor companies in the Korean market index, and high levels of leveraged trading by retail investors.
Analysts Identify KOSPI as AI Investment Barometer
Evercore ISI stated in a report that "the most concerning point for investors is that the Korean stock market has now become a 'tail that wags the dog' market that moves global asset markets, especially the Nasdaq-100 index." The firm noted the correlation coefficient between KOSPI and Nasdaq-100 rose to 0.95, explaining that investors recognize the Korean stock market as a proxy indicator for AI investment.
Michelle Gibley, Director of International Equity Research and Strategy at Charles Schwab, assessed that "the Korean stock market has effectively become a barometer for AI investment." She analyzed that the critical role of memory semiconductors within the AI supply chain, improving performance of semiconductor companies, the domestic stock market structure heavily concentrated in the semiconductor sector, and high leverage investment are amplifying volatility.
Leveraged ETF Trading Triggers Seven Circuit Breakers
Retail investors heavily invested in single-stock leveraged exchange-traded funds (ETFs) based on Samsung Electronics and SK Hynix as underlying assets, which expanded the price fluctuation range of representative AI stocks. Seven circuit breakers have already been triggered on KOSPI this year. Financial authorities suspended approval of new single-stock leveraged ETFs to curb excessive speculative trading.
Evercore analyzed that "the combination of memory semiconductor supply shortages, high semiconductor concentration in the economy and stock market, and leveraged investment by retail investors with strong risk appetite has made the Korean stock market a core market of interest for global investors." The firm explained that "the recent six-week plunge was very steep, but it's a familiar pattern for technology stock investors," adding that "long-term growth themes like AI tend to show excessive movements both upward and downward when combined with leverage."
KOSPI Records 113% Gain Over One Year Despite Recent Decline
KOSPI declined 18% over the recent month but rose 113% over the past year and recorded a 60% increase year-to-date.
![KOSPI and KOSDAQ performance chart]()
KOSPI and KOSDAQ indices [Source: Yonhap News]
FAQ
What is the correlation between KOSPI and Nasdaq-100?
The correlation coefficient between KOSPI and Nasdaq-100 recently reached 0.95, according to Evercore ISI. This high correlation indicates that movements in the Korean stock market closely track movements in the US technology-heavy Nasdaq-100 index.
Why did Korean financial authorities suspend new leveraged ETF approvals?
Financial authorities suspended approval of new single-stock leveraged ETFs to curb excessive speculative trading after seven circuit breakers were triggered on KOSPI this year. Retail investors had heavily invested in leveraged ETFs based on Samsung Electronics and SK Hynix, amplifying market volatility.
