Korea Gains Favor Over China Internet

Asia-focused professional capital is currently tilting toward South Korean equities and away from large Chinese internet platforms, reflecting a clear relative preference in regional allocation. This shift coincides with a powerful AI and semiconductor investment cycle that is directing an estimated material share of global AI capex into South Korea and Taiwan.

Within listed vehicles, the iShares MSCI South Korea ETF (EWY) sits at the center of this rotation as a liquid way to express a Korea overweight. Benchmark-heavy names such as Samsung Electronics (005930.KS) and SK Hynix (000660.KS) capture both the fundamental AI memory upcycle and the incremental flows from active Asia and EM funds.

On the funding side, Chinese internet exposure is frequently reduced via broad baskets like KraneShares CSI China Internet ETF (KWEB), which aggregates major platform companies. Historically, episodes when active managers underweight China internet and overweight Korea, particularly around 2018-2021 and again during the 2023-2025 AI upcycle, have aligned with periods of Korean outperformance on a relative basis.

The pattern has not been universal, but when it has worked, three ingredients tended to coincide: documented professional overweights to Korea, a favorable global tech and semiconductor cycle, and ongoing regulatory or geopolitical overhangs on Chinese internet platforms. The current configuration of flows, sector tailwinds, and policy risk aligns closely with those prior episodes, placing Korea at the center of regional equity positioning debates.