KOSPI decoupled from the S&P 500 in July, with their monthly correlation coefficient falling to 0.025 from 0.5 in February. Samsung Electronics and SK Hynix account for 52.30% of KOSPI's market capitalization as of the previous day's closing. This month through the previous day, the Philadelphia Semiconductor Index declined 13.36% while KOSPI fell 14.06%, showing near-identical movement. The two-stock concentration has transformed KOSPI into a semiconductor sector index reflecting global AI investment sentiment, according to analysts.
KOSPI-S&P 500 Correlation Drops to 0.025 in July
According to Herald Economy analysis, the monthly correlation coefficient between the S&P 500 and KOSPI fell to 0.025 this month. Correlation coefficients range from -1 to 1, with values above 0.5 generally indicating meaningful correlation. The current reading near zero indicates no directional relationship between the two indices.
Recent market movements demonstrated this divergence. On the 10th (local time), the S&P 500 closed 0.42% higher on the New York Stock Exchange, but KOSPI plunged 8.95% in a single day on the 13th.
Volatility differences proved stark. From last month through the previous day, KOSPI recorded 12 trading days with daily movements exceeding 5%. During the same period, the S&P 500 had zero days with movements of 5% or more.
Samsung and SK Hynix Hold 52.30% of KOSPI Market Cap
The concentration of semiconductor stocks in KOSPI's composition drives the decoupling from U.S. markets. The S&P 500 comprises diverse sectors including technology, finance, healthcare, energy, and consumer goods, limiting the impact of any single industry on the overall index.
U.S. markets also show increasing concentration in large-cap technology stocks, particularly the "Magnificent 7." According to Goldman Sachs, the top 10 stocks in the S&P 500 account for approximately 40% of total market capitalization, the highest level since 1990. However, KOSPI's concentration exceeds this significantly - Samsung Electronics and SK Hynix alone comprise 52.30% of total market capitalization based on the previous day's closing prices.
Seo Sang-young, researcher at Mirae Asset Securities, stated: "KOSPI is a market where the movements of Samsung Electronics and SK Hynix determine the index direction. The decoupling from the S&P 500 stems from differences in index composition, and when compared to the Philadelphia Semiconductor Index, it shows virtually identical trends."
Analysts Project Earnings Contribution to Reach 80.2%
Securities firms forecast that the concentration phenomenon will intensify as semiconductor companies' earnings contributions exceed their market cap weightings. Kim Yong-gu, researcher at Yuanta Securities, stated: "The 12-month forward earnings contribution of Samsung Electronics and SK Hynix in KOSPI surged to 70.5% at the end of June this year, and is projected to reach 71.8% at the end of the third quarter and 80.2% at the end of the fourth quarter."
Kim added: "Meanwhile, the market cap weighting of these two stocks stood at 56.4% as of the end of June this year, significantly below their earnings contribution. Despite short-term stock price and supply-demand volatility, there is a high possibility of additional concentration corresponding to their earnings contribution."
FAQ
What caused KOSPI to decouple from the S&P 500 in July?
KOSPI's correlation coefficient with the S&P 500 dropped to 0.025 in July due to the overwhelming concentration of Samsung Electronics and SK Hynix, which together comprise 52.30% of KOSPI's market capitalization. This two-stock dominance makes KOSPI behave more like a semiconductor sector index than a diversified market index.
How does KOSPI's concentration compare to the S&P 500?
The top 10 stocks in the S&P 500 account for approximately 40% of total market capitalization, the highest since 1990 according to Goldman Sachs. In contrast, just two stocks - Samsung Electronics and SK Hynix - make up 52.30% of KOSPI's market cap based on the previous day's closing prices.
What do analysts project for Samsung and SK Hynix's earnings contribution to KOSPI?
Yuanta Securities researcher Kim Yong-gu projects that the 12-month forward earnings contribution of Samsung Electronics and SK Hynix will reach 71.8% by the end of the third quarter and 80.2% by the end of the fourth quarter, up from 70.5% at the end of June.
