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IS IT TOO LATE TO ENTER KOREA AI MEMORY TRADE?

Global funds' allocations to emerging markets equities has reached the highest level since 2018, according to UBS strategists, with AI and tech helping out.

This is particularly true for Korea, where the benchmark index .KS11 is up 27.1% year to date. Earlier this week, that same "AI memory trade" led UBS's APAC tech team to up its Korea rating to overweight.

But after such a roaring start to the year, it's no wonder they also broached the question: "isn't it too late to enter these stocks?"

Their answer is (obviously) no. They think there's still value on the table, even considering the Korea market is up 2.4 times in the last 12 months, with its two biggest stocks Samsung and SK Hynix 000660.KS rising by four times combined.

"...even at these higher price levels, the next three years of FCF generation (UBSe) of these two stocks are about 70-90% of their market cap (and their balance sheets are debt free," wrote the analysts earlier this week.

UBS's memory team observes markets usually peak about two quarters ahead of the peak in operating profits.

"We would expect to revisit our stance on the Korea market in 2H 2026," they say.

On Sunday, Citi raised its target for the Kospi to 7,000 from 5,500. The index is up another 5.2% since Citi made that call, last trading at 5,354.39.

The U.S.'s Micron Technology MU.O meanwhile is down 5.4% this week.

Morningstar Direct data tracking US domiciled ETFs showed Korea equity ETFs are among the top five with the most growth in flows so far in 2026.

In a note on Tuesday, Bank of America quants flagged the Kospi as among a group of four markets currently showing "extreme bubblelike dynamics", beaten only by gold.

(Lucy Raitano)

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