Investors often talk about “global markets” as if all countries move together. But when you look closely at the correlation patterns between Korea and other major equity markets, a much more nuanced picture emerges.
A new correlation analysis reveals that Korea has very high daily-return correlations with some countries—such as the United States, Japan, Singapore, Hong Kong, and Europe—while showing much lower correlations with resource-heavy economies like Brazil and South Africa.
Below is a simple infographic summarizing the findings:
1. Korea moves closely with markets tied to global growth
Countries with high correlation to Korea include:
United States
Japan
Hong Kong
Singapore
EAFE (developed markets)
China
Canada
Australia
Germany
United Kingdom
These markets share several common features:
A. Exposure to global demand
Korea is one of the most export-dependent economies in the world.
Its stock market reacts strongly to:
shifts in global demand
interest rate cycles
US dollar movements
global liquidity
trade volumes
That means Korea tends to move in sync with other countries that are similarly sensitive to global macro drivers.
B. The technology and semiconductor cycle
Korea’s market is dominated by tech and semiconductors—Samsung Electronics and SK Hynix alone can determine market direction.
Naturally, Korea aligns with other tech-heavy or tech-linked markets:
United States (mega-cap tech, AI, semiconductors)
Japan (chip equipment makers)
Taiwan (TSMC-driven ecosystem)
Singapore (trade/tech hub)
When the global semiconductor cycle booms, these markets rally together.
When the cycle weakens, they fall together.
C. China-related supply chain linkages
Korea’s deep ties to China—both as a market and as part of supply chains—mean it moves with Hong Kong, Singapore, and Japan more than investors may assume.
2. Why Korea diverges from Brazil, South Africa, and some emerging markets
The markets with the lowest correlation to Korea include:
Brazil
South Africa
(relatively) Taiwan
And the reason is simple: their economic engines are completely different.
A. Commodity-driven vs. tech-driven
Brazil and South Africa move with prices of:
oil
metals
minerals
agricultural products
Korea’s market is shaped primarily by:
semiconductors
electronics
autos
global manufacturing
These forces rarely move together—so the stock markets don’t either.
B. Local political and currency volatility
Brazil and South Africa experience frequent moves driven by:
political uncertainty
fiscal outlook swings
currency shocks
inflation spikes
central bank surprises
Korea, by contrast, is more tethered to global tech and trade—not domestic political cycles.
C. Taiwan’s special case
Taiwan may seem similar to Korea (both are semiconductor superpowers), but:
Taiwan’s index is extremely concentrated in TSMC
geopolitical risks with China introduce idiosyncratic movements
timing differences in chip cycles can create divergence
Thus Korea–Taiwan correlation is only moderate.
3. The big takeaway:
Korea is a global-cycle market, not a local-cycle market.
Its stock market responds more to:
global economic conditions
the semiconductor/AI cycle
USD and interest rates
global risk appetite
than to domestic politics or local commodity dynamics.
What this means for investors
Korea is high beta to global growth and tech sentiment.
Diversification across countries is not enough—diversification across economic drivers matters more.
Commodity-heavy EM markets still offer diversification from Korea.
But during global shocks, correlations tend to rise across the board.
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