Key Highlights

  • Korea's Kospi fell 3.7% on Tuesday, October 20, 2026, as doubts about AI spending spread to Asia, a setback for the iShares MSCI South Korea ETF (NYSEARCA:EWY), which tracks large Korean companies.
  • SK Hynix fell 4.2% and Samsung Electronics fell 3%, according to CNBC, while Japan's Nikkei 225 lost 1.3% in the same session as the regional selloff in technology shares widened.
  • Brent crude held near USD 110, according to Saxo, adding pressure on Korea, a large importer of energy, while US chip stocks had bounced on Monday, October 19.
  • The fund trades in US hours after Korea closes, so its moves also reflect US sentiment and the dollar, and may differ from the Kospi on any single day.

A Sharp Fall in Seoul

The iShares MSCI South Korea ETF (NYSEARCA:EWY) holds large and mid-sized Korean companies, with heavy exposure to the country's two memory chip giants. On Tuesday, October 20, 2026, Korea's Kospi fell 3.7%, as reported by CNBC and Saxo. SK Hynix dropped 4.2% and Samsung Electronics 3%. Japan's Nikkei 225 fell 1.3%. The selloff came a day after US chip stocks rebounded about 3%, which shows that Monday's recovery did not reassure Asian investors. A benchmark US chip index had lost 11.4% in the week to October 16, its eighth straight daily decline. Saxo also noted that Brent crude held near USD 110 during the session.

Why Korea Is So Exposed to AI Doubts

Korea's stock market is unusually dependent on memory chips. SK Hynix and Samsung supply high-bandwidth memory, a stacked type of memory used alongside AI processors, so their earnings depend on how much data centre operators spend. When investors question the debt funding that build-out, as they did after CoreWeave fell about 25% in a week, the impact on Korean shares is direct. The iShares MSCI South Korea ETF (NYSEARCA:EWY) concentrates that exposure. Oil adds a second channel. Korea imports most of its energy, so crude near USD 110 raises costs for companies and can weaken the won, which reduces returns for dollar-based holders of the fund.

Risks and What to Watch

The main risk for the iShares MSCI South Korea ETF (NYSEARCA:EWY) is that AI spending doubts deepen, pushing memory prices and chip earnings lower. A second risk is oil, since the US and Iran both claim control of the Strait of Hormuz, through which much Asian crude passes. A third is competition, after reports that China's CXMT is a rising threat in memory. A planned strike at Micron plants in Taiwan could tighten memory supply, although any benefit to Korean rivals is an inference. Investors should watch the Micron strike on Thursday, October 22, the Federal Reserve decision on Wednesday, October 28 and US megacap earnings that day.

Where Things Stand

The answer is that a 3.7% Kospi slide shows how directly AI spending doubts reach the iShares MSCI South Korea ETF (NYSEARCA:EWY), given its heavy weighting in SK Hynix and Samsung. Oil near USD 110 adds a cost and currency headwind for an energy importer. The fund may diverge from the Kospi because it trades during US hours. The next catalysts are the Micron strike on October 22 and the Fed decision with Microsoft and Alphabet results on October 28. Foreign markets carry currency risk, and this is not investment advice.