Korea’s Epic Rally Faces Strain From Chip Reliance, Short Bets

The South Korean Kospi Index’s stall shy of the 5,000 milestone reveals strains beneath the surface, as retail investors stay wary and gains hinge on just a handful of stocks.

After rising every session this year to a 16% rally before breaking its streak Tuesday, momentum is clouded by its dependence on just two chip stocks, the won’s weakness, and a market where decliners outpace gainers. Analysts fret the index, without Samsung Electronics Co. and SK Hynix Inc., could trade as much as 20% below its current 4,886 level.