Nikkei said the Nikkei 225 is increasingly moving in tandem with the Kospi as investors treat both markets as an AI and chip trade, with Korean chip capex and leveraged ETFs amplifying swings in Japanese semiconductor shares.
Concern is deepening in Japan's securities industry that domestic equities are moving too closely with South Korea in what market participants call a "Korea linkage," as shared semiconductor exposure, short-term futures flows and growing sensitivity to Korean chip stocks overshadow company-specific earnings and valuations. The Nikkei newspaper reported on Aug. 6 that the Nikkei 225 and the Kospi have moved in the same direction on 85% of trading days this year, versus 58% from June 2025 through Aug. 6, 2026, reinforcing the view among overseas investors that Japan and South Korea form a single AI and semiconductor basket. That dynamic was visible on Aug. 5, when the Kospi trimmed its intraday gain and the Nikkei also lost momentum. Volatility has also risen, with the Nikkei 225's intraday volatility rate topping 2% for three straight months, the first such stretch since 2008. Market participants in Tokyo point to leveraged single-stock exchange-traded funds linked to Samsung Electronics Co. and SK Hynix Inc. as one factor behind larger swings, while Japanese semiconductor names including Kioxia Holdings Corp., Tokyo Electron Ltd., Fujikura Ltd., Advantest Corp. and material suppliers such as Shin-Etsu Chemical Co. are increasingly trading in line with Korean peers. Japanese investors are also paying closer attention to Korean corporate results, with SK Hynix's July 30 earnings increasingly treated alongside Nvidia Corp. as a leading indicator for AI data-center investment, high-bandwidth memory demand and the broader semiconductor cycle. Brokerages are now watching whether trading can shift back toward company fundamentals in the second half and whether overseas investors return from September, when major investor conferences including a BofA Securities event from Aug. 31 to Sept. 4 could help refocus attention on individual companies.