After KOSPI ETF Hits 200 Trillion KRW — Looking Past Semiconductor Concentration

Korea’s domestic equity ETF assets crossed 200 trillion KRW for the first time. KOSPI challenges the 7,500 level. Samsung Electronics’ annual operating profit forecast has been upgraded to 200 trillion KRW. A Mirae Asset macro strategist calls the current data center expansion an “early-stage revolution” and sees extended upside.

In this market, the majority of capital sits in semiconductor and semiconductor equipment ETFs. That concentration itself is the setup for looking at what comes next.

Why Rotation Deserves Attention

Many analysts see KOSPI 7,500 as achievable. The debate is what drives it there. Samsung Electronics and SK Hynix together represent over 25% of KOSPI market cap — semiconductor direction shapes index direction.

In a market where semiconductor stocks have already made large moves, sector rotation into laggard industries is the typical pattern. When Korean financial media starts running headlines like “If not semiconductors, then what?” — that question itself signals rotation pressure is building.

Sector Investment Thesis

Power Equipment: Data Center Demand Is a Structural Tailwind

The physical infrastructure behind data center expansion runs on power. Global data center electricity demand is tracking over 40% year-over-year growth in 2026. US federal government data center expansion (4x in two years) adds to a structural demand surge for transformers and power equipment globally.

HD Hyundai Electric (267260): Extra-high-voltage transformer supply shortage creates a structural pricing advantage for Korean exporters. North American export share expanding. 2025 order backlog reached a historical high — with 12–18 month lag from order to revenue recognition, 2H 2026 earnings visibility is high.

Risk: Copper and silicon steel price spikes compress margins. Even without order cancellations, raw material cost escalation can reverse profitability.

Defense: Structural Demand From Geopolitical Reordering

Prolonged Russia-Ukraine conflict, Middle East instability, and US-China tensions are structurally expanding global defense budgets. Korea’s defense export pipeline to Europe and the Middle East expanded significantly after the 2025 Poland contract.

Hanwha Aerospace (012450): K9 self-propelled howitzer and Chunmoo multiple rocket launcher export contracts provide backlog-based earnings visibility. Space business (satellite launch vehicles) adds growth optionality. Overseas export revenue expected to exceed domestic revenue for the first time in 2026.

Risk: High FX sensitivity (export contracts denominated in USD). Exposure to changes in US export control policy under the Trump administration.

K-Beauty: Fundamental Re-rating in Progress

K-beauty was relatively sidelined during the semiconductor and defense-led rally. But Amorepacific’s Q1 2026 revenue outside China (North America, Southeast Asia) reportedly grew over 30% year-over-year — suggesting the China de-risking strategy is paying off. A fundamental re-rating becomes possible when China risk has been priced out.

Amorepacific (090430): Sulwhasoo premium positioning strengthening in North America and Japan. China revenue share declining from ~60% in 2022 to ~35% in 2026. Balance sheet improvement confirmed (higher cash, lower debt ratio).

Risk: KRW strength against the dollar compresses export revenue. Palm oil and specialty raw material price volatility.

References

• KOSPI 7500 Under Pressure — Will Semiconductor Rally Broaden Into Rotation? — Energy Economy
• Korean Equity ETF Assets Hit Record 200 Trillion KRW — Yonhap News
• “If Not Semiconductors, Then What?” — Investor FOMO Builds — Money Today