A ‘Gangnam Style’ Korean Equity Tantrum

Our EM strategists view Korea’s equity tantrum as a warning for global risk assets and recommend taking profits and downgrading Korean stocks. Korea has become the most extreme expression of the global equity rally, driven by semiconductor momentum, high-beta exposure, and rampant retail speculation. 

Retail investors have powered the rally since early this year, but our colleagues warn that fear could eventually overwhelm greed and turn individuals into net sellers. At the same time, cash-on-the-sidelines ratios in Korea, the US, Japan, and the Euro Area are at historical lows, market breadth is weak, and valuations are stretched. 

Our colleagues recommend taking profits on the long Asian semis/short US hyperscalers trade, which has gained 140% since November 6, 2025. They maintain long KRW/short USD and remain long Korean 10-year government bonds.