Is it time for a correction in the sharply rising South Korean stock market?
The KOSPI index in South Korea has risen 50% this year, mainly benefiting from the overweight of memory stocks such as SK Hynix and Samsung. Bank of America’s Hartnett pointed out that SK Hynix has increased fivefold in the past 10 months, which may lead to a severe overbought condition in the KOSPI, similar to other historical market bubbles. The Nikkei index and the renminbi may also face the risk of a pullback
The South Korean stock index (the dark blue line in the chart represents KOSPI) has risen 50% so far this year—mainly due to its overweight in memory stocks like SK Hynix and Samsung.
Bank of America’s Hartnett believes that SK Hynix (the darling of the artificial intelligence memory sector) has increased fivefold over the past 10 months (with an additional 18% rise, the increase will match the sixfold bubble increase of Cisco from October 1998 to March 2000), which has made the KOSPI's overbought level as severe as that of gold on January 26, Bitcoin on March 24, and the Mag7 index in July 2023. All these markets experienced significant corrections after being overbought, and this time, the Nikkei index (currently at a historical high) and the renminbi (at a three-year high) may face the same fate.
