Cross-border investment requires a comprehensive consideration of dual fluctuations in both stocks and currency exchange rates. The South Korean stock market has experienced a significant surge, leading to substantial gains for a number of QDII funds heavily invested in Korean chip stocks. Driven by a robust supercycle in AI memory chips, leading semiconductor companies like Samsung Electronics and SK Hynix have seen their stock prices repeatedly hit new highs. This has propelled the Korea Composite Stock Price Index (KOSPI) to a year-to-date gain of approximately 77%. Against this backdrop, several related thematic QDII products have achieved year-to-date returns exceeding 70%. With massive capital inflows, most of these products have frequently halted trading and imposed purchase limits. "Given the unpredictable international situation, the Korean stock market may experience significant volatility. Samsung Electronics and SK Hynix, due to their substantial prior gains, could face even greater price swings," a Shanghai-based trader noted. It is worth mentioning that cross-border investments also face exchange rate fluctuation risks. When the Korean won is in a clear depreciation trend, exchange rate losses for medium to long-term holdings may continuously erode equity investment returns, necessitating a balanced consideration of both stock and currency risks when making allocations. High Premiums and Frequent Trading Halts Specifically, several semiconductor-themed cross-border funds have halted trading due to excessively high premiums. On May 8, Huatai-PineBridge Sino-Korea Semiconductor ETF halted trading again, marking its 55th halt this year. As of the close on May 8, its premium rate was approximately 17%. Prior to this, the company had issued at least 129 warnings about premium risks. On the same day, Invesco Great Wall Global Chip LOF also halted trading due to premium risks, having halted six times since April 27. The fund has repeatedly reminded investors to pay attention to premium risks, warning that blind investment could lead to significant losses. Currently, the A, C, and I share classes of the Sino-Korea Semiconductor ETF feeder fund have all suspended subscriptions. The aforementioned trader stated that intense investor enthusiasm in the secondary market, combined with limited QDII quotas and difficulties in primary market subscriptions, have led to frequent ETF premiums. High premiums often accompany high risks, and the elevated premiums driven by market sentiment will eventually decline as sentiment cools, requiring investor caution. In terms of net asset value, the Huatai-PineBridge Sino-Korea Semiconductor ETF, as the only cross-border ETF in China targeting the Korean market, has seen its net asset value consistently reach new highs since mid-April, with a year-to-date gain of 73.6%. Additionally, several other products heavily invested in Korean chip stocks, including CCB Principal Emerging Markets QDII, Guotai Asia Opportunities QDII, E Fund Asia Select QDII, and JPMorgan Asia Pacific Advantage QDII, have achieved cumulative annual gains of 62%, 63.8%, 19.8%, and 16.7%, respectively. In terms of holdings, CCB Principal Emerging Markets Mixed QDII has a particularly concentrated allocation to Korean chip stocks. As of the end of the first quarter of 2026, the fund's top ten holdings included TSMC, NVIDIA, SK Hynix, Broadcom, and Samsung Electronics. In Q1, the fund significantly increased its holdings in Samsung Electronics from 184,000 shares to 407,400 shares, a rise of over 121%. Its holdings in SK Hynix increased from 61,000 shares to 108,000 shares, a gain of approximately 77%. The fund's size grew from 1.976 billion yuan at the end of the previous year to 4.569 billion yuan by the end of Q1. However, due to QDII quota limitations, it has currently suspended large-amount subscriptions. Guotai Asia Opportunities QDII also made substantial additions to its Korean chip stock holdings. The fund significantly increased its holdings in Samsung Electronics from 50,100 shares to 128,900 shares, a rise of over 157%. Its holdings in SK Hynix increased from 7,800 shares to 21,800 shares, a gain of nearly 180%. However, judging from the operations of some funds, institutional views on the future prospects of Korean chip stocks have begun to diverge. In Q1 of this year, both JPMorgan Asia Pacific Advantage Mixed QDII and E Fund Asia Select QDII reduced their holdings in Samsung Electronics by 21.5% and 32.8%, respectively. The trader suggested this might be due to fund managers locking in profits or optimizing portfolio structure. Korean Stock Rally and Accumulating Risks Reviewing this round of the Korean stock market rally, it has been driven by multiple factors including the AI computing power cycle, high demand in the memory industry, and substantial foreign capital inflows. As of May 7, the Korea Composite Stock Price Index (KOSPI) closed at 7490.05 points, once again setting a new historical record. The two memory chip giants, Samsung Electronics and SK Hynix, together account for approximately 45% to 50% of the KOSPI index weight, with their stock performance largely dictating the overall market trend. As of early May, SK Hynix's stock price had risen about 122% this year, with its market capitalization surpassing 1000 trillion won for the first time, making it South Korea's first company to achieve a "trillion-won" market cap. Samsung Electronics' stock price also rose about 94% year-to-date, with its market cap exceeding 1 trillion USD. However, the excessive concentration of Samsung and SK Hynix in the index poses a risk. If the international situation changes, the memory chip boom cycle slows, or AI-related investment expectations cool, the Korean stock market could face significant volatility. For example, in March of this year, influenced by Middle East geopolitical conflicts, Korean stocks experienced a single-day plunge of 7.24%. Regarding exchange rate fluctuation risks, Wind data shows that the Korean won has depreciated by over 4% against the Chinese yuan since 2026. If the won continues to depreciate, foreign investors' returns from holding Korean stocks will face erosion at the exchange rate level. Furthermore, Kang Ho-gu, Director of the Korea-China Institute for Economic and Society, believes that stock market performance does not accurately reflect the overall state of the Korean economy. South Korea's real GDP grew by only 1.0% last year, and aside from the semiconductor industry, there are concerns about long-term growth momentum. Seo Sang-yong, an analyst at Mirae Asset Securities, forecasts that if AI chip demand remains at current levels, the KOSPI could reach 10,000 points by the end of this year. Seo also cautioned about risks, stating that if economic growth weakens due to inflation concerns and US-Iran conflicts, leading to a significant drop in demand, the KOSPI index could also plummet below 4,500 points.