As volatility in semiconductor and electronics stocks has increased recently, exchange-traded fund (ETF) flows have emerged as a key variable driving share prices. Not only large-cap stocks such as Samsung Electronics (005930.KS) and SK hynix (000660.KS), but also major component and equipment makers including Samsung Electro-Mechanics, Hanmi Semiconductor, and LG Innotek are swinging sharply with ETF inflows and outflows.
According to the financial investment industry on Tuesday, large-scale capital has recently flowed into artificial intelligence (AI) and semiconductor ETFs, causing some stocks to respond more sensitively to changes in ETF inclusion weights and rebalancing schedules than to company-specific issues. In fact, as of the 12th of last month, Samsung Asset Management's KODEX AI Semiconductor TOP2 Plus had a 12% weighting in Hanmi Semiconductor and did not include Samsung Electro-Mechanics. But the following day, it rebalanced to include Samsung Electro-Mechanics at 27.36% and lowered Hanmi Semiconductor's weighting to 8.35%.
Through the rebalancing, Samsung Electro-Mechanics' weighting within the ETF rose above those of SK hynix (25.34%) and Samsung Electronics (23.79%). At the time, Samsung Electro-Mechanics' share price rose 6.44% on the 12th and 7.41% on the 13th, gaining more than 14% over the two days. Hanmi Semiconductor, by contrast, fell 5.63% on the 12th before rebounding 6.09% the next day.
Recently, semiconductor value-chain stocks have shown high volatility. Samsung Electro-Mechanics swung sharply, rising 18.39% on the 9th of this month before falling 8.38% on the 10th. LG Innotek extended sharp gains for two consecutive trading sessions on the 29th of last month (28.57%) and the 1st of this month (4.94%), then dropped 18.17% on the 2nd, adding to investor confusion. Hanmi Semiconductor also showed a seesaw pattern, falling 10.42% on the 8th before rising 9.07% on the 9th.
The scale of ETF inclusions has already reached a level that is difficult to ignore. Based on the top 10 ETFs by inclusion weight for each stock, the estimated inclusion amounts, calculated from the previous day's portfolio deposit file (PDF), were 3.6044 trillion won for Samsung Electro-Mechanics, 2.114 trillion won for Hanmi Semiconductor, and 797.6 billion won for LG Innotek.
The industry believes that as the ETF market grows, a structure could emerge in which the supply and demand of certain stocks becomes increasingly dependent on ETFs. Because ETFs must track an index, they mechanically buy a stock in proportion to its inclusion weight when capital flows in, and sell it conversely when capital flows out. For this reason, the explanation goes, a stock's share price can move significantly based solely on ETF capital flows, even without changes in the company's earnings or industry conditions.
In particular, the number of stocks whose ETF weightings have risen sharply amid soaring share prices, like Samsung Electro-Mechanics, has been increasing recently. Under current rules, thematic ETFs must lower a stock's weighting through rebalancing once it exceeds a certain level. For stocks whose weightings have grown excessively due to rising share prices, the structure forces ETFs to periodically release shares. The market is paying attention to the possibility that large sell orders could emerge in this process. If an ETF sells holdings to adjust its weighting, it can act as a short-term supply burden.
"In the process of excluding a stock that had been concentrated in a particular ETF and including another stock, individual stock price volatility can become significant," an official in the asset management industry said. "Not only individual company news but also ETF assets under management and rebalancing schedules are becoming important criteria for investment decisions."
Meanwhile, the KOSPI fell as low as 7,394.46 (-4.35%) in early trading but recovered its losses to close at 7,763.95, up 33.13 points (0.43%) from the previous trading day. The KOSDAQ, where a buy-side sidecar (a halt on the effectiveness of program buy orders) was triggered, closed at 996.93, up 45.30 points (4.76%), approaching the 1,000 mark. This was driven by surging share prices of semiconductor materials, parts, and equipment makers such as Jusung Engineering (23.37%) and Wonik IPS (20.82%).
