South Korea ETFs: Under-the-Radar Beneficiaries of AI

Asian Markets Outperform in 2026

This year, Asian equities have shown remarkable strength. The iShares Asia 50 ETF (AIA) has climbed 15.2% since the start of the year, far outpacing the modest 0.6% increase seen by the State Street SPDR S&P 500 ETF Trust (SPY). Over the most recent five-day period (as of February 25, 2026), AIA advanced by approximately 3.9%, while SPY managed a 0.5% gain. Notably, South Korea’s stock market has emerged as a standout performer in the region.

South Korea’s Market Hits New Highs

The iShares MSCI South Korea ETF (EWY) has soared 41.4% year-to-date, with the South Korean market reaching unprecedented levels. The Kospi index broke through the 6,000-point threshold for the first time ever. This surge is largely credited to significant gains in Samsung Electronics and SK Hynix, the two largest companies by market capitalization, both benefiting from a boom in AI-powered memory semiconductors. Semiconductors play a crucial role in driving the country’s market performance.

What’s Fueling the Rally?

Over the past year, the EWY ETF has delivered an impressive 151% return. The KOSPI index posted its strongest growth rate of the 2000s last year, propelled by robust demand for AI-related semiconductors and supportive government policies. The momentum has continued into 2026, with the index reaching new records amid ongoing earnings growth and policy backing.

In late January 2026, Samsung announced its highest-ever quarterly profit, driven by surging demand for AI memory chips, exceeding both analyst expectations and its own forecasts. Similarly, SK Hynix doubled its profits in 2025, also beating estimates due to tight memory chip supplies.

SK Hynix shares have jumped 12.5% over the past week and are up 50.4% for the year. Samsung Electronics has gained 8.2% in the last week, with a year-to-date increase of 58.4%.

Is It Time to Consider South Korea ETFs?

Goldman Sachs identifies South Korea as the leading market in the Asia-Pacific region, nearly doubling in value during 2025. The firm’s analysts believe the rally still has room to run, forecasting a potential 120% surge in Korean equities in 2026.

Growth projections remain positive, with the IMF expecting 1.9% real GDP growth, the Bank of Korea estimating 1.8%, and the OECD predicting 2.1%. Moody’s anticipates 1.8% growth for South Korea in 2026, citing increased semiconductor exports and higher investment as the global AI cycle continues.

With ongoing global shortages of semiconductors and strong demand from artificial intelligence, data centers, and advanced electronics, South Korea’s technology and export-focused ETFs are well positioned for further gains.

Additionally, Moody’s Investors Service has maintained South Korea’s “Aa2” credit rating with a stable outlook.

Top South Korea ETFs to Watch

Given the current environment, several South Korea-focused ETFs stand out. The Franklin FTSE South Korea ETF (FLKR) and the iShares MSCI South Korea ETF (EWY) are among the top performers. FLKR continues to show strength, boasting a weighted alpha of 173.04, while EWY’s positive alpha stands at 189.19. A positive alpha indicates that the ETF is generating returns above what would be expected given its risk and benchmark.

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• State Street SPDR S&P 500 ETF Trust (SPY): ETF Research Reports
• iShares MSCI South Korea ETF (EWY): ETF Research Reports
• iShares Asia 50 ETF (AIA): ETF Research Reports
• Franklin FTSE South Korea ETF (FLKR): ETF Research Reports

This article was first published by Zacks Investment Research.

Zacks Investment Research