As the Korean stock market continues its rally, Chinese retail investors are joining the "Buy Korea" wave. The China-Korea Semiconductor ETF listed on the Shanghai Stock Exchange has seen explosive capital inflows, trading at an unusual 10-20% premium above its net asset value (NAV).
According to financial industry sources on the 27th, the China-Korea Semiconductor ETF recently recorded daily trading volume exceeding 8.6 billion yuan (approximately 2 trillion won). The price, which hovered around 1 yuan in early last year, has more than tripled to surpass 4 yuan within a year. The ETF has posted double-digit gains this year alone, with net buying continuing for 20-30 consecutive trading days.
The most notable aspect is the premium. The ETF traded at nearly 20% above its actual underlying asset value during intraday trading.
The reason investors are willing to bear such premium costs is clear. This product is virtually the only publicly offered ETF allowing mainland Chinese investors to access major Korean semiconductor stocks using yuan. The portfolio includes Samsung Electronics (16.31%) and SK Hynix (15.45%), along with Korean semiconductor companies such as LEENO Industrial and DB HiTek, as well as Chinese chipmakers including SMIC and Cambricon. Samsung Electronics and SK Hynix alone account for over 30% of holdings.
China strictly manages capital outflows, making direct overseas stock investment difficult for individuals unless they open accounts abroad. This has concentrated Korean semiconductor investment demand into this particular ETF.
Interestingly, the Korean market fever is not limited to China. The iShares MSCI South Korea ETF (EWY), a major Korea investment vehicle listed on U.S. exchanges, has seen billions of dollars in net inflows over the past month. It ranked among the top ETFs for capital inflows among thousands of U.S.-listed equity ETFs, clearly demonstrating global capital's "Buy Korea" stance.
Major Wall Street hedge funds and asset managers are also increasing their Korea allocations. Some managers have reportedly added Korean ETFs while reducing Chinese stock exposure. Analysts attribute this to a combination of factors including expectations for AI semiconductor sector improvement, valuation appeal, and potential revaluation of won-denominated assets.
However, signs of overheating are also emerging. The China-Korea Semiconductor ETF has frequently been designated as an investment caution stock due to high premium rates in recent months, with trading halts at market open occurring repeatedly. Market participants are calling for "more diversified products to absorb Korea investment demand." While numerous China-focused ETFs are listed in Korea, this ETF remains virtually the only product allowing direct Korean investment from mainland China.
Meanwhile, according to the Shanghai Stock Exchange, the China-Korea Semiconductor ETF fell after the afternoon opening but quickly rebounded, rising more than 7% at one point before closing at 4.254 yuan, down 1.55% from the previous day.
