EWY Assets Jump

The iShares MSCI South Korea ETF (NYSE: EWY ) has done well this year, helped by the ongoing surge of Samsung and SK Hynix. It has jumped by 87% this year, beating other popular US funds such as those tracking the Nasdaq 100 Index. However, there is a risk that the fund may be about to reverse in the near term. EWY ETF is Facing Some Major Risks South Korean stocks have soared this year, helped by the ongoing artificial intelligence boom that has pushed its top stocks like Samsung and SK Hynix to their record highs.

This growth has led to more demand for these stocks from South Korean and American investors. 6 billion in assets in the last 12 months. This increase has brought its total assets to over $23 billion. However, the fund is facing some major risks.

The first one is that Samsung and SK Hynix have an outsized influence in its composition. 7%. 54% of the fund. 7% of the fund, which explains why it has jumped sharply in the last 12 months.

The risk, however, is that the fund will go through a reversal when the three stocks retreats. 77% following Samsung’s and SK Hynix’s reversals. Another key risk is that the ongoing South Korean stock market rally has been largely fueled by retail investors, many of whom appear to be driven by fear of missing out (FOMO). 8 billion this year, while margin debt has jumped 71% to more than $12 billion.

Historically, such periods of market euphoria have often been followed by sharp reversals as speculative sentiment fades. That risk helps explain why many foreign investors have continued to reduce their exposure to South Korean equities despite the market’s strong rally. 60, its lowest level on June 5. At the same time, the MACD indicator suggests that it has formed a bearish divergence pattern.

This pattern happens when the two lines of the indicator are falling. In this case, they formed a bearish crossover and are pointing downwards. Therefore, there is a risk that the stock will drop further in the near term. 60.

More downside will be confirmed if this happens. Read Also: US-Iran Truce Strained As Hormuz Attacks Hit Tankers, Boost Energy Market Risk Image: Shutterstock