For most investors, 2026 has been yet another feather in the cap of U.S. equities. The S&P 500 continues to push higher, the Nasdaq just hit another all-time high, artificial intelligence remains the defining investment theme, and mega-cap technology companies are at the helm.
But while Wall Street has dominated the discourse, the performance of U.S. equities has been massively outshone by one global stock market index: South Korea’s KOSPI index.
And the headlines touting that outperformance have been few and far between.
That’s partly because of what behavioral economists call home country bias – the tendency for investors to overwhelmingly favor stocks from their own country, even when compelling opportunities exist elsewhere. U.S. investors are particularly susceptible because American markets have outperformed for so long and because the U.S. market is already home to many of the world’s largest companies.
But that blind spot, which leads investors to eschew global markets in favor of domestic markets, can be a costly mistake.
Case in point: The KOSPI has been the best-performing global index over the last year, fueled largely by an explosion in demand for semiconductors and AI-related hardware. In 2026 alone, the KOSPI has surged 64.3%, which has helped drive the index an astronomical 103.9% higher in the last 12 months.
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Why the KOSPI Has Been So Strong
South Korea sits at the center of one of the most important investment trends in the world: artificial intelligence infrastructure.
The country is home to semiconductor giants Samsung Electronics and SK Hynix (SKHY), two critical suppliers of memory chips powering AI servers, data centers, and next-generation computing systems. As demand for AI infrastructure has surged globally, Korean chipmakers have become major beneficiaries.
The Important Caveat: This Is a Narrow Market
U.S. investors have become pretty comfortable investing in a narrow market.
To wit: From the end of March until mid-May, 10 stocks were responsible for 69% of the U.S. market’s recent gains, and the 10 largest companies in the U.S. now account for 37.8% of the total market cap of the S&P 500. But the KOSPI takes that market concentration to a whole new level.
The index is heavily dominated by (and the recent performance has primarily been driven by) the two aforementioned chipmakers.
The iShares MSCI South Korea ETF (EWY), which tracks the KOSPI (and is one of the most accessible ways for U.S. investors to add Korean exposure), is heavily concentrated in SK Hynix and Samsung.
As of September 22, SK Hynix represents 22.5% of the fund’s assets, just behind Samsung’s 22.9% share.
In other words, just two companies command more than 45% of the total value of the index.
That concentration has amplified gains during the AI boom, but it also creates significant volatility any time the AI trade falls out of favor and can lead to sharp downside moves.
From the end of March through the end of May, EWY boomed 77%, with multiple 5%+ days along the way. But that volatility cuts both ways, and the fund experienced multiple one-day crashes over the summer, including declines of 14% (June 5) and 12% (June 23).
Another practical issue is accessibility.
Aside from SK Hynix, which listed its ADRs in the U.S. earlier this year, buying individual South Korean stocks directly can be difficult for U.S.-based investors, which keeps many investors from exploring global opportunities.
And, given the strength of U.S. equities, the opportunity cost of missing the global trade has been muted by strong performance at home.
Should You Buy the EWY?
So, given the incredible performance and heightened risk, the million-dollar question is: Should investors consider adding Korean exposure via EWY?
Yes… but with a healthy dose of skepticism.
Buying EWY gives you representative exposure to the KOSPI, both the upside and downside, and your results will be dictated by the performance of Samsung and SK Hynix.
In fact, because Samsung has been such a disproportionately large piece of the Korean stock market for many years, EWY has often been a way for U.S. investors to indirectly build stakes in that company.
In other words, buying EWY is a play on Samsung and SK Hynix, with little consideration given to the rest of the Korean market.
So, if you want to invest in those two particular South Korean tech companies, EWY is a good way to do it, just don’t expect the same level of risk as a broadly diversified international fund.
A Final Note on International Investing
For years, many investors have become increasingly concentrated in U.S. assets because that strategy has worked extraordinarily well. But markets move in cycles. Leadership rotates. Entire countries and sectors can spend years ignored before suddenly becoming market leaders.
Carl Delfeld, Chief Analyst of Cabot Explorer, has written about investment concentration in the U.S. and the inevitable reallocation towards the rest of the world, a phenomenon he refers to as the “Great Rebalancing.”
And while the KOSPI bull market may be unique due to the high weights of Samsung and SK Hynix, large-scale capital flows to high-potential international markets are not.
If you’re interested in learning where Carl expects global capital to flow next, subscribe to Cabot Explorer today.
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*This post has been updated from a previously published version.
