Korean semiconductor ETFs suffered significant losses on the 13th as Samsung Electro-Mechanics stock plunged 18.62%, outpacing declines in Samsung Electronics and SK Hynix. ETFs with high Samsung Electro-Mechanics allocations experienced single-day losses exceeding 14% and weekly losses around 20%, according to data from MPDoctor and KOSCOM ETF Check. The sharp correction followed a period when asset managers increased Samsung Electro-Mechanics positions based on AI server substrate growth expectations and supply shortages in MLCC and FC-BGA components. The concentration of portfolios around specific high-performing stocks has raised concerns about reduced diversification benefits in semiconductor ETF products.
Samsung Electro-Mechanics-Heavy ETFs Record 14-15% Single-Day Losses
On the 13th, the KOSPI closed at 6806.93, down 669.01 points or 8.95% from the previous trading day, according to MPDoctor. Samsung Electronics dropped 10.70% and SK Hynix fell 15.37%, while Samsung Electro-Mechanics declined 18.62%.
KODEX AI Semiconductor TOP2 Plus, with a Samsung Electro-Mechanics allocation of 17.55%, recorded a -14.85% return on the 13th, the worst performance among non-leveraged semiconductor ETFs. 1Q K Semiconductor TOP2+, holding 17.12% in Samsung Electro-Mechanics, dropped 14.65%. ACE K Semiconductor TOP2+, with 17.02% allocation, fell 14.18%.
Additional ETFs including HANARO Fn K-Semiconductor and SOL AI Semiconductor TOP2 Plus, all carrying Samsung Electro-Mechanics positions above 15%, experienced similar steep declines. These ETFs recorded weekly returns in the -20% range.
ETFs Without Samsung Electro-Mechanics Exposure Limit Declines to 8%
ETFs that excluded Samsung Electro-Mechanics from their portfolios showed relatively contained losses. PLUS Global HBM Semiconductor and TIGER Semiconductor TOP10 recorded returns of -8.17% and -8.64% respectively on the 13th.
Asset Managers Increased Samsung Electro-Mechanics Positions on AI Substrate Growth Outlook
Asset management firms increased Samsung Electro-Mechanics allocations based on expectations of mid-to-long-term growth driven by improved earnings performance. The company has been positioned as a primary beneficiary of the AI server and network high-value substrate market. Managers anticipated continued gains from price increases due to supply shortages in multilayer ceramic capacitors (MLCC) and flip-chip ball grid array (FC-BGA) products.
KODEX AI Semiconductor TOP2 Plus and HANARO Fn K-Semiconductor newly added SK Square to their portfolios last month. The inclusion reflects efforts to capture investment demand concentrated in large-cap semiconductor stocks, given SK Square's stake in SK Hynix.
Industry Voices Concerns Over Portfolio Concentration Risk
The clustering of ETF portfolios around specific stocks has drawn criticism. Industry observers note that the original purpose of offering broad semiconductor industry exposure centered on the two major players has diminished, weakening diversification benefits. The concentration in market-cap leaders has resulted in similar portfolio compositions across different asset managers.
An industry representative stated, "Market evaluation of Samsung Electro-Mechanics' AI substrate competitiveness remains positive," while noting that "rapid share price appreciation led to increased allocations by asset managers, and in the correction phase, ETF returns are moving in a similar direction." The representative advised, "When selecting semiconductor ETFs, investors need to examine not just the sector but also the concentration of holdings and valuation burden."
FAQ
What caused Korean semiconductor ETFs to decline sharply on the 13th?
Korean semiconductor ETFs experienced significant losses on the 13th primarily due to Samsung Electro-Mechanics stock falling 18.62%, which exceeded declines in Samsung Electronics (10.70%) and SK Hynix (15.37%). ETFs with Samsung Electro-Mechanics allocations above 15% recorded single-day losses of 14-15% and weekly losses around 20%.
Why did asset managers increase Samsung Electro-Mechanics positions in semiconductor ETFs?
Asset managers increased Samsung Electro-Mechanics allocations based on the company's positioning as a major beneficiary of AI server and network substrate markets, along with expected gains from price increases due to supply shortages in MLCC and FC-BGA components. The strategy aimed to capture mid-to-long-term growth from improved earnings performance.
How did semiconductor ETFs without Samsung Electro-Mechanics exposure perform?
ETFs that excluded Samsung Electro-Mechanics from their portfolios showed relatively limited losses on the 13th. PLUS Global HBM Semiconductor declined 8.17% and TIGER Semiconductor TOP10 fell 8.64%, significantly less than the 14-15% losses experienced by Samsung Electro-Mechanics-heavy ETFs.
