The South Korean and US AI trades are becoming increasingly synchronized: The 60-day correlation between the KOSPI and Nasdaq 100 index is up to +0.46, the highest since July 2024. This marks a sharp reversal from a negative correlation of -0.20 recorded in March. By comparison, the 5-year average is just +0.16 or nearly one-third the 60-day metric. Furthermore, the Nasdaq 100's sensitivity to declines in South Korean stocks is up to its highest level since 1990. At the same time, the MSCI World Index's sensitivity to the South Korean market is up to its highest in 4 years. In other words, declines in South Korean equities are increasingly serving as an early read on US and global equity risk appetite, particularly in technology stocks. The AI trade has never been more global.

Foreign investors are piling back into South Korean equities: Investors outside of South Korea purchased +$5.4 billion of South Korean stocks on Friday, the largest daily purchase on record. Meanwhile, domestic retail investors sold a record -$5.5 billion of equities, marking their 3rd consecutive daily sale. This marks a sharp reversal after foreign investors sold -$110 billion of Korean stocks in 2026 prior to Friday's session. Over the same period, domestic retail investors purchased +$67 billion, including +$57 billion in May and June alone. Furthermore, deposits held at Korean retail brokerages for stock purchases dropped -$23 billion from their June peak, to ~$74 billion. Foreign capital appears to be returning to South Korea.