Korea-Focused KORU ETF Slides as Samsung, SK Hynix Selloff Deepens Ahead of US Big Tech Earnings

South Korean equities came under renewed pressure on Monday, with the benchmark Kospi index and Samsung Electronics shares both sliding roughly 4.3% while SK Hynix dropped about 4%, extending a sharp downturn in the country's dominant chipmakers. Because Samsung and SK Hynix together make up close to 60% of the Kospi's total market value, their swings have an outsized effect on the broader index, making it one of the most concentration-heavy major markets in the world.

The selloff also hit the Direxion Daily South Korea Bull 3X Shares (KORU), a leveraged fund that tracks the country's largest listed companies, which fell about 2%. SK Hynix's U.S.-listed shares slipped further overnight and have now retreated roughly 10% from where they opened on July 10. By contrast, U.S. memory names Micron and SanDisk held onto gains, clawing back some ground after a rough week.

Adding to the gloom, Citigroup downgraded its outlook on the South Korean market to 'neutral' on Monday, stepping back from the overweight stance it had held since mid-2025. According to a report cited by the bank, the shift reflects sharp volatility in chip stocks and reduced conviction in AI-linked trades, even as Citigroup said it remains bullish on artificial intelligence over the long run.

The move is part of a broader rotation that has been building since early July, as investors pull money out of semiconductor and AI-infrastructure stocks and funnel it toward large-cap technology and software companies. Memory producers including Samsung, SK Hynix and Micron have all felt the pressure as markets weigh whether massive AI infrastructure spending can be sustained at its current pace, while capital has instead flowed toward Apple, Microsoft, Alphabet, Amazon and Meta, seen as better placed to profit from AI through software and applications.

The timing coincides with a pivotal week for U.S. corporate earnings. Alphabet is set to report first among the tech majors on Wednesday, followed by Intel on Thursday. Alphabet shares are up 11% so far this year while Intel has surged 156%, underscoring how much investor enthusiasm has already been priced into chip-related names heading into the results.

Despite the pullback, sentiment among retail traders tracked on Stocktwits remained bullish on both KORU and SK Hynix, with several pointing to persistent memory chip shortages and strong demand for DDR5 products as reasons the selloff could prove temporary. Analysts say the coming earnings reports, and any updates on AI capital spending plans, will likely determine whether the recent volatility in Korean chip stocks eases or deepens further.