July 20, 2026 marked a roller-coaster trading day for the Korea Composite Stock Price Index (KOSPI). The index opened at 6,643.58, down 2.60% from the previous session, and at one point during the day dropped to 6,515.24, widening its loss to 4.5%. As of 1:52 PM local time, KOSPI stood at 6,614.20, down 3.03%. Amid this intense volatility in the Korean stock market, the iShares MSCI South Korea ETF (ticker: EWY), which tracks the Korean market, saw a strikingly different capital flow: over $280 million poured in over the past week, putting it on track for its best weekly inflow since inception.
This stark contrast is telling. While short-term capital fled in panic due to a semiconductor sector correction, long-term institutional investors were positioning themselves in Korea’s tech industry through EWY. So, what exactly is EWY as an investment vehicle? What’s the logical link between EWY and the AI semiconductor boom? And how should investors assess the value and risks of this ETF amid the current volatility in Korean equities?
From HBM to EWY: Building a Complete AI Investment Logic Chain
To understand why EWY is drawing attention at this moment, it’s essential to clarify the industry logic chain.
Training and inference for large AI models require immense computing power, with GPUs serving as the physical backbone. The performance of AI accelerator manufacturers like NVIDIA largely depends on high-bandwidth memory (HBM) integration. HBM, a DRAM memory based on 3D stacking technology, offers bandwidth density far exceeding traditional memory and is a crucial component for unlocking GPU computational potential.
In this segment, Korean memory chip giants dominate the global HBM market. According to Counterpoint Research, SK Hynix held a commanding 58% share of HBM revenue in Q1 2026, far ahead of Micron and Samsung Electronics, each at 21%. Samsung Electronics is also a core global supplier of memory chips, with extensive capacity and a broad customer base in both DRAM and NAND sectors.
The logical chain thus unfolds clearly: AI demand growth → GPU demand growth → HBM demand surge → Korean semiconductor companies benefit → EWY ETF receives fundamental support.
EWY’s ability to capture this logic stems from its unique portfolio structure. The ETF tracks the MSCI Korea 25/50 Index and was launched by BlackRock’s iShares in 2000, following a passive index strategy with at least 80% of assets invested in index constituents. As of the end of June 2026, EWY held 90 assets with approximately $24.4 billion under management. Notably, SK Hynix and Samsung Electronics together account for nearly 45% of the ETF’s weight. Some sources indicate SK Hynix alone approaches a 25% weighting, while Samsung Electronics is around 23%. With these two companies representing nearly half the portfolio, EWY is less a diversified country ETF and more akin to a "semiconductor thematic fund" focused on Korea’s memory chip leaders.
The Capital Paradox Amid Semiconductor Turbulence
Since July 2026, the Korean stock market has exhibited a rare "disconnect between fundamentals and prices."
From an industry perspective, the memory chip market continues to improve. DRAM spot prices rose an average of 2% over the past week and are up 7% from a month ago. DRAM-related ETFs attracted about $4.5 billion in net inflows in July. SK Hynix management recently projected that 2027 could see the most severe memory supply shortage in history, with supply-demand imbalances possibly lasting beyond 2030.
Yet, stock prices have diverged sharply from these fundamentals. SK Hynix shares pulled back 43% from their recent peak, returning to levels last seen during the 2022 crisis. Samsung Electronics also came under pressure, dropping over 5% intraday on July 20. On July 16, Korea’s Financial Services Commission issued a joint supplementary plan tightening rules for single-stock leveraged ETFs and ETNs related to Samsung Electronics and SK Hynix.
Analysts attribute this downturn to two main factors: global institutional portfolio rebalancing and forced liquidations triggered by leveraged ETFs. The semiconductor sector’s weight in the KOSPI 200 index surged from 43.0% in April to 61.1% in June, then retreated to 55.5% recently. As global funds were compelled to adjust positions due to the sector’s outsized weight, Korea’s market suffered disproportionate impact from its semiconductor concentration.
Against this backdrop, EWY’s contrarian inflows stand out. According to compiled foreign media data, EWY, with about $22.4 billion in assets, attracted over $280 million in net inflows last week. Previously, EWY saw nearly $2 billion in inflows over two trading days. The market’s interpretation: short-term traders are deleveraging, while long-term institutions are buying the dip via EWY.
The logic behind this capital movement: EWY offers an alternative to single-stock leveraged ETFs, bypassing their high volatility while maintaining exposure to Korea’s semiconductor leaders. For investors bullish on long-term AI memory chip demand but wary of single-stock leveraged risk, EWY serves as a relatively stable allocation tool.
EWY’s Unique Position: ETF or "Semiconductor Leveraged Proxy"?
EWY’s concentrated holdings give it a distinctive dual nature in terms of investment characteristics.
By design, EWY is a country ETF tracking Korea’s large-cap index, intended to provide overseas investors with convenient access to the Korean equity market. Its holdings span large and mid-cap Korean stocks, with sector allocation meant to reflect the broader Korean economy.
In reality, however, Korea’s market itself is highly concentrated—semiconductors at one point represented over 60% of KOSPI 200’s weight—so EWY’s actual risk exposure is heavily focused on the memory chip supply chain. Samsung Electronics and SK Hynix together account for 44.5% to 45% of the fund’s assets. Including SK Square (whose main asset is SK Hynix shares) and Samsung Electro-Mechanics, the Samsung-SK group’s weight becomes even more pronounced.
This means EWY’s net asset value is tightly linked to Korea’s memory chip cycle. When HBM demand is strong and memory chip prices rise, EWY typically delivers outsized returns; conversely, when the semiconductor industry enters a downturn, EWY’s losses can far exceed those of a typical country ETF.
For investors, this characteristic is both an opportunity and a challenge. The opportunity: EWY provides an efficient way to participate in the AI memory chip theme without having to analyze SK Hynix or Samsung Electronics’ financials or valuations individually, nor worry about single-stock liquidity risk. The challenge: EWY lacks the diversification typical of country ETFs, with risk-return features more akin to a semiconductor sector fund.
Risk Analysis: Three Issues to Consider
First, the unpredictability of the semiconductor cycle. The memory chip industry is highly cyclical. Although HBM demand is currently robust—SK Hynix’s 2026 full-year capacity is fully sold out—expansion plans are also ramping up quickly. On June 29, 2026, Samsung Electronics and SK Hynix announced massive investment plans, committing over KRW 47.55 trillion to develop semiconductors, physical AI, and data centers in Korea. While large-scale expansion reflects optimism about future demand, it also risks oversupply down the road. If AI server demand slows or major cloud providers’ capital expenditures fall short of expectations, the HBM supply-demand balance could quickly reverse.
Second, concentration risk in the Korean market. EWY covers 90 stocks, but its top two holdings account for nearly half the portfolio. This concentration means that even if Korea’s broader economy performs well, any operational issues or sharp declines in Samsung Electronics or SK Hynix will significantly impact EWY’s net asset value. Additionally, Korea faces geopolitical risks, currency fluctuations, and sensitivity to foreign capital flows—all of which can affect EWY’s performance.
Third, the amplifying effect of leveraged products. Gate launched EWY3L/USDT and EWY3S/USDT—3x leveraged ETF pairs—on July 17, 2026. Leveraged products magnify both gains and losses, especially amid high volatility in Korea’s semiconductor sector. The rebalancing mechanism of leveraged ETFs can further intensify short-term price swings. Investors must fully understand the risk dynamics when using leveraged products.
Lee Jae-wan, Head of Global Investment Analysis at Hana Securities, described the recent price adjustment as an "oversold" phase, where declines exceeded what fundamentals warranted. He also stressed the importance of confirming whether AI investment momentum continues during the current big tech earnings season. Historical data shows that when Alphabet delivers revenue-driven earnings surprises, Samsung Electronics and SK Hynix average gains of 11% and 17% respectively in the following month; conversely, when results fall short, average returns are 2% and -3%.
Conclusion
The contrarian inflows into EWY ETF during Korea’s July 2026 market turbulence fundamentally reflect the market’s belief in the long-term logic of AI memory chips, despite short-term volatility. With SK Hynix and Samsung Electronics together making up nearly half of EWY’s weight, this ETF serves as a key window into global AI hardware investment sentiment. For investors looking to participate in Korea’s semiconductor supply chain, EWY offers a more diversified and stable option than direct single-stock holdings or leveraged products. However, it’s crucial to recognize that EWY’s high concentration means it remains subject to the semiconductor cycle. Until the uncertainty around sustained AI capital expenditure and tight HBM supply-demand is resolved, EWY’s volatility is likely to persist.
FAQ
1. What is the EWY ETF?
EWY is the MSCI Korea ETF issued by BlackRock’s iShares, tracking the MSCI Korea 25/50 Index and providing exposure to large and mid-cap Korean stocks. The ETF launched in 2000 and follows a passive index strategy.
2. What are EWY’s main holdings?
As of June 2026, EWY’s top two holdings are SK Hynix (about 24%–28%) and Samsung Electronics (about 23%), together accounting for nearly half the fund’s assets. Other holdings include SK Square, Samsung Electro-Mechanics, Hyundai Motor, and more.
3. How does EWY differ from direct investment in Korean stocks?
EWY offers overseas investors a convenient way to access the Korean market without opening a Korean brokerage account. However, EWY’s portfolio is highly concentrated in semiconductors, so its risk-return profile is closer to a semiconductor sector fund than a diversified country ETF.
4. What are the main risks of EWY?
EWY faces risks from the semiconductor cycle, Korean market concentration, and currency fluctuations. With SK Hynix and Samsung Electronics holding such high weights, any volatility in their share prices will significantly impact EWY’s net asset value. Additionally, shifts in memory chip supply and demand are core variables affecting EWY’s performance.
5. What EWY-related trading products are available on Gate?
Gate launched EWY3L/USDT and EWY3S/USDT 3x leveraged ETF pairs on July 17, 2026. EWY stock is also available in Gate’s stock section.
