South Korea’s Top Two Memory Chip Players: Outlook Under Leverage Rules & Central Bank Tightening

南方东英资产管理

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Not just Samsung and SK Hynix! KOSPI 200 ETF launches in Hong Kong [New CSOP ETF Listing]

The Korean memory chip rally shows no signs of slowing—SK Hynix and Samsung Electronics have surged 256% and 184% year-to-date, respectively 1！

Afraid to chase high prices after such sharp rallies? Concerned about high volatility in individual stocks? Consider index investing instead

$CSOP KOSPI 200 ETF (03121.HK)$ Listed on the Hong Kong Stock Exchange on June 18, 2026! A new tool offering comprehensive exposure to Korean equity opportunities—the KOSPI 200 Index focuses on Korea’s large-cap blue-chip stocks,$Samsung Electronics (005930.KR)$ at$SK Hynix (000660.KR)$ weightingas high as 60%2！

As one of the most representative indices of the Korean stock market, the KOSPI 200 has gained 315% over the past three years3, and has surged 126% year-to-date1，The combined weighting of its top two constituents—Samsung Electronics and SK Hynix—is as high as 60%2。

Are triple-digit gains a bubble or grounded in fundamentals? A closer look at the drivers behind this Korean bull market reveals three solid underlying forces:The semiconductor boom driven by the AI supercycle, valuation discounts from the 'Korea discount,' and sustained global capital inflows。

Driver 1: The AI supercycle ignites the semiconductor rally

The ongoing AI supercycle is the primary catalyst driving the Korean bull market.

As a critical player in the global semiconductor landscape, South Korea holds a particularly strong competitive advantage in high-end memory chips—exemplified by Korean companies such as Samsung Electronics and SK hynix,which together command approximately 80% of the global HBM (High Bandwidth Memory) market share.4In the first four months of 2026, South Korea’s semiconductor exports surged by more than 100% year-over-year,5making it a core engine driving overall economic growth.

Amid surging AI computing demand and tight memory supply, the business model for memory chip sales is undergoing profound transformation. Suppliers aim to secure medium- to long-term profitability, while downstream customers seek price and supply stability, shifting the industry fromshort-term pricing cyclesShift in directionto long-term agreements (LTAs).。

Historically, the memory chip industry relied on spot-market pricing, leading to volatile earnings tied to cyclical swings and recurring cycles of 'price wars' and 'inventory liquidation,' which weakened manufacturers’ risk resilience and pressured valuations. Today, the industry is shifting toward 3- to 5-year long-term agreements (LTAs), locking in both pricing and capacity to convert uncertain cyclical volatility into stable, predictable revenue streams. Combined with prepayment and penalty clauses for breach of contract, manufacturers can nowproactively manage supply and demand rather than passively endure cycles, significantly improving revenue visibility and enabling memory makers to command higher valuation premiums.

NowadaysAI investment opportunities are continuously deepening into upstream components and equipment.In addition to memory chips, infrastructure segments such as MLCCs (multilayer ceramic capacitors) and PCBs (printed circuit boards) have also benefited. Korean companies play irreplaceable roles in key links—Samsung Electro-Mechanics is a leading global MLCC supplier, while Hanmi Semiconductor leads in HBM packaging equipment.

Driver #2: Getting cheaper as it rises? The 'Korea discount' remains attractive

Korean equities have long been undervalued—a phenomenon commonly known as the 'Korea discount'—primarily due to corporate governance shortcomings, chaebol structures, and low shareholder returns, all of which have suppressed valuation levels in the Korean stock market.

Since 2025, South Korean President Lee Jae-myung has introduced multiple government initiatives, including the 'Corporate Value-Up Program' and revisions to commercial law, accelerating share buybacks, enhancing shareholder engagement, and boosting total shareholder returns—thereby steadily narrowing the Korea discount.

Although the Korea discount continues to narrow, Korean equities remain notably attractive in terms of valuation compared to other major global indices.Currently, the KOSPI 200 Index trades at a forward P/E ratio of 9.02x, compared to 22.39x for the S&P 500 Index.6。

Moreover, robust earnings are making Korean stocks 'cheaper as they rise.'In the current bull market, strong earnings growth has provided solid support for this rally, yet valuation expansion has lagged behind earnings growth. In the first five months of 2026, the KOSPI 200 Index surged by 114%, driven by a remarkable 160% increase in earnings, while its valuation actually contracted by 17%.7。

Driver #3: Global capital flows poised to continue

Global investor appetite for Korean assets has exploded. According to Bloomberg data, net annual inflows into global ETPs focused on the Korean market soared to $31.89 billion in 2025, hitting a record high; in just the first five months of 2026, inflows have already neared the full-year 2025 total, reflecting...International capital’s preference for Korean assets has significantly increased.

‘Foreign omnibus accounts’ are also expected to drive further sustained inflows of foreign investment.This mechanism allows foreign investors to directly trade Korean stocks and funds through accounts in their home countries or regions, without needing to open separate accounts with local Korean brokers, thereby lowering investment barriers and operational costs.

According to The Korea Herald, Korean brokerages generally expect this expansion of retail accounts to trigger a ‘surge’ of overseas capital inflows, with industry forecasts predicting up to 10 million new foreign retail accounts accessing the Korean stock market. Currently, firms such as Samsung Securities and Hana Securities have already launched foreign omnibus accounts* through partnerships with overseas trading platforms.

Coinciding with this trend, the ‘two-way flow’ of both foreign and domestic capital has further strengthened the funding resilience of the Korean equity market.

– On the foreign investment side, foreign ownership in the KOSPI market has shown an upward trend in recent years, reaching approximately 40% as of the end of May 2026,9indicating that international investors are increasingly concentrating their holdings in core Korean assets.

– Domestic capital is surging back into the market,with total domestic inflows—comprising both retail and institutional investors—into the KOSPI soaring to KRW 44 trillion (approximately USD 29 billion) in May 2026, marking a new阶段性 high.10。

In summary, the Korean stock market boasts strong fundamentals driven by the AI boom—particularly in the high-end memory sector, where demand far outstrips supply—and remains attractively valued in a 'cheaper as it rises' valuation trough. Inflows from foreign capital and returning domestic funds are further solidifying a robust base for Korean equities.

3121.HK: Samsung and SK Hynix together account for 60% [2]

CSOP KOSPI 200 ETF (3121.HK) is scheduled to list on the Hong Kong Stock Exchange on June 18, 2026,Employing a full replication strategy, it aims to closely track the performance of the KOSPI 200 Index (Net Total Return version) before fees and expenses, offering investors a comprehensive new tool to capture opportunities in Korean equities.

No currency conversion or Korean brokerage account required, with an entry threshold of just approximately HK$78011, allowing investors to accessthe CSOP KOSPI 200 ETF (3121.HK)to conveniently and easily participate in the growth of Korean equities and gain one-click exposure to global AI core assets such as Samsung Electronics and SK Hynix.

^^ Please note that certain fees may be increased up to the permitted maximum upon one month’s prior notice to unitholders. For details, please refer to Section 'Fees and Charges' in Part I of the Prospectus. # As the fund is newly established, this figure is an estimate only, representing the estimated total recurring expenses over a 12-month period expressed as a percentage of the estimated average net asset value during the same period. Actual figures may differ once the fund commences operations and may vary annually. During the first 12 months after launch, the recurring expense ratio is capped at 2% of the sub-fund's average net asset value, and any recurring expenses exceeding 2% of the average net asset value will be borne by the fund manager and will not be charged to the fund.

Compared with other internationally recognized broad-based Korean equity indices,The KOSPI 200 Index does not impose an individual stock weight cap,allowing investors to fully benefit from upside opportunities in strong-performing stocks. Specifically, the top three sectors by weight in the KOSPI 200 Index are Information Technology, Industrials, and Financials. In addition to Samsung Electronics and SK Hynix, the Information Technology segment also includes key companies such as Samsung Electro-Mechanics, Samsung SDI, and LG Innotek,which are core constituents of the AI infrastructure supply chain.

Introduction to Korean Stock Market Trading12

The Korea Exchange operates on Korea Standard Time (KST, UTC+9), with trading days from Monday to Friday, excluding official public holidays. Regular trading hours run from 09:00 to 15:30 (6.5 hours), with additional pre-market and post-market auction sessions.

In terms of market segmentation, the KOSPI serves as the main board, hosting large-cap blue chips such as Samsung Electronics and SK Hynix, and is the primary venue for foreign investment in Korean assets; the KOSDAQ primarily lists high-growth small and mid-sized enterprises in sectors like IT and biotechnology; while KONEX acts as an early-stage incubator, providing financing channels for startups, with top performers eligible for eventual graduation to KOSDAQ or KOSPI.

Regarding risk management, the Korean stock market implements strictprice stabilization mechanisms.Individual stocks are subject to a daily price limit of ±30% based on the previous trading day's closing price. In response to extreme market-wide volatility, the exchange has implemented acircuit breaker mechanism., when the KOSPI or KOSDAQ index falls by 8%, 15%, or 20% from the previous trading day's closing price and remains at that level for one minute, trading will be halted in phases or the market will close outright.Sidecar mechanism (program trading halt mechanism), which automatically suspends program trading for five minutes once the benchmark index futures price fluctuation hits a predefined threshold. This mechanism provides essential 'shock-absorbing' protection while maintaining market liquidity.

Disclaimer and Important Notice

The product(s) mentioned in this document have been authorized by the Securities and Futures Commission of Hong Kong ('SFC'). Such authorization does not imply official recommendation by the SFC.

This document is for general reference only and does not constitute investment advice or any form of recommendation, nor should it be construed as an offer or solicitation to invest in any investment product. For investment advice, please consult your professional legal, tax, and financial advisors.

Investing involves risks. Past performance figures do not indicate future results. Investors should carefully read the offering documents and key facts statements of the relevant fund for further information, including product features and all risk factors contained therein. Investors should not make investment decisions based solely on this document. This document is not intended for distribution or dissemination in any jurisdiction where such distribution or dissemination is prohibited.

This document is not legally binding. CSOP Asset Management Limited assumes no responsibility for this document and expressly disclaims any liability for any losses arising from or in reliance on the whole or any part of its contents. This document does not grant the recipient any copyright or intellectual property rights—whether directly, indirectly, or by implication—in the information contained herein. No information or portion thereof may be copied, distributed, or reproduced without the prior written consent of CSOP Asset Management Limited.

The product(s) described in this document may be subject to concentration risk with respect to geography, market, sector, or investment instruments. Compared to funds with more diversified portfolios, the value of the product(s) described herein may experience greater volatility.

For the index provider’s disclaimer, please refer to the relevant fund’s offering documents. This document has been prepared by CSOP Asset Management Limited and has not been reviewed by the SFC.

Issuer: CSOP Asset Management Limited

1. Bloomberg, December 30, 2025 – June 15, 2026

2. Korea Exchange, as of June 5, 2026

3. Bloomberg, June 16, 2023 – June 15, 2026

4. Counterpoint, as of Q4 2025

5. Bloomberg, as of end-April 2026

6. Bloomberg, as of May 29, 2026

7. Bloomberg, as of end-May 2026

8. Bloomberg, as of end-May

9. Korea Exchange, as of May 28, 2026

10. Bloomberg, Korea Exchange, as of end-May 2026

11. CSOP Asset Management, estimated figures for reference only

12. Korea Exchange

* Forecast data is for reference only and does not represent or guarantee actual future performance

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