South Korea's AI semiconductor trade attracts massive global capital

South Korea has emerged as a primary destination for global capital targeting the artificial intelligence ecosystem. Investors have heavily favored South Korean companies such as Samsung Electronics and SK Hynix, which are leading manufacturers of high-bandwidth memory (HBM) essential for AI processors. This surge contributed to the KOSPI index rising from approximately 3,000 to over 9,000 points between June 2025 and June 2026.

However, the rapid growth has led to concerns regarding a crowded trade and increased market volatility. The introduction of single-stock leveraged ETFs for Samsung and SK Hynix in May 2025 allowed investors to amplify returns through borrowed money, contributing to potential market turmoil.

In the broader emerging markets landscape, South Korea has attracted $3.5 billion in foreign inflows, while Taiwan saw $1.8 billion. In contrast, India has faced capital redemptions as funds were redirected toward the AI-driven sectors in East Asia, though recent data suggests India's relative performance may be stabilizing.