South Korea’s ETF boom puts assets on track to overtake Taiwan

[SINGAPORE] In yet another sign of the South Korean market’s rising prominence on the global stage, assets in the nation’s exchange-traded funds (ETFs) are on the verge of overtaking those in Taiwan for the first time since 2019.

South Korean ETFs have witnessed average weekly inflows of US$1.2 billion since early 2025, taking the total assets under management to US$239 billion, according to data compiled by Bloomberg Intelligence (BI). That average is about four times Taiwan’s US$330 million. The gap in assets between the two markets narrowed to just US$11 billion as at the end of last week.

“South Korea will overtake Taiwan in ETF AUM by May, signalling a further reduction of the Korea discount,” said Rebecca Sin, an analyst at BI. The former is benefiting from government-led policies to revitalise the market as well as strong earnings, particularly in semiconductors, she added.

The two tech-heavy Asian markets have been a focal point in recent years, thanks to a global frenzy sparked by the rise of artificial intelligence (AI). As a shortage of memory chips intensifies amid a data centre boom, shares of Korea’s Samsung Electronics and SK Hynix have sharply outperformed Taiwan Semiconductor Manufacturing Company over the past year.

That’s helped the benchmark Kospi extend its breakneck rally, it is up more than 22 per cent in 2026 after a world-beating 76 per cent surge last year. The advance saw the local equity market surpass Germany in value last month, vaulting into the world’s top 10 list based on data compiled by Bloomberg. Taiwan, whose benchmark Taiex Index is up 9.8 per cent so far this year, ranks No 8.

Of about US$95 billion added to the value of South Korean ETF assets in 2025, almost 57 per cent was driven by fresh capital inflows rather than mere market appreciation, according to BI. That’s versus just 41 per cent in Taiwan, indicating a heavier reliance on price gains.

To be sure, the surge in Korea ETF flows is part of a broader trend wherein investors are pouring billions of US dollars in new money into ETFs tracking emerging-market assets. Investor caution seems to be rising as the global AI trade turns more volatile. Just this month, the Kospi has witnessed an intraday slide of more than 4 per cent in two occasions.

Market watchers, including BI’s Sin, expect growth in Korean ETF assets to sustain on account of structural factors that go beyond tech, such as government efforts to make the market more lucrative for local retail investors.

South Korea’s diversified, sustainable expansion is at the heart of its ascendance, which stands in contrast to Taiwan’s struggle to find an alternative to investors’ rush for high-dividend investment options, according to Sin.

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“Strong inflows of retail investors into ETFs are driving rapid market expansion,” said Jason Yu, head of product strategy and development at Samsung Asset Management. “Products that were previously not permitted are expected to be introduced, helping in further shrinking of the Korea discount.” BLOOMBERG