Over the past month, as investors traded jokes about how smart money was leaving the Korean market, their cash poured into overseas equities and ultra-short-term safe assets. Yet the flow of funds and the returns on those accounts point in opposite directions. While overseas index products and ultra-short-term safe assets delivered negligible gains or outright losses, the biggest winners came from the KOSDAQ.
The largest net inflow among domestic exchange-traded funds over the past month went to KODEX Money Market Active, which drew 1.79 trillion won with a return of 0.28%, according to Koscom's ETF CHECK on the 4th. It was followed by TIGER U.S. S&P 500 with 685.5 billion won and a return of minus 0.59%, KODEX CD Rate Active with 460.7 billion won and 0.28%, and KODEX U.S. Nasdaq 100 with 433.2 billion won and 3.85%.
What stands out is that every one of the top 10 funds fell into one of two camps: short-term rate and bond products, with six funds, and major U.S. indexes, with four. Roughly 5.35 trillion won flowed into those 10 funds, all of it headed for U.S. markets or safe assets. But returns on the products that attracted the money were slim. The average return for the 10 largest inflow recipients over the month was just 0.83%.
The best-performing ETFs over the same month were instead dominated by products tied to KOSDAQ-listed materials, parts and equipment suppliers. Excluding leveraged and inverse funds, the top performer across all ETFs was DS KOSDAQ Active, which returned 32.36%. Next came SOL Aerospace Value Chain at 30.86%, TIGER KOSDAQ 150 IT at 29.50%, SOL Semiconductor Front-End Process at 29.01%, KoAct Optical Communications & Satellite Network Active at 28.94%, SOL AI Semiconductor Materials, Parts & Equipment at 28.34%, KODEX AI Semiconductor Core Equipment at 27.20% and TIGER KOSDAQ Active at 26.77%. All 10 of the leaders, down to RISE AI Semiconductor Top 10 at 26.49%, surged between 26% and 32%.
The KOSDAQ index rebounded 11.11% over the past month, rising to 893.29 from 803.98, according to the Korea Exchange. That means the main KOSDAQ ETFs more than doubled the index's gain. The pattern reflects a shift in attention: while large-cap chipmakers such as Samsung Electronics stalled under worries that earnings had peaked and under persistent foreign selling, KOSDAQ suppliers of materials, parts and equipment drew interest as factory utilization recovered and supply-chain benefits became visible. With trading flows all but absent — what the market calls an "empty house" — targeted buying moved into names with proven technology.
In the end, while most investors parked cash to avoid losses or kept buying U.S. indexes out of habit, the outsized returns emerged from the back alleys of Korean technology stocks that everyone had been ignoring.
Idle cash sitting in just two large domestic money market active funds now totals 2.17 trillion won. With third-quarter earnings season approaching, the question is whether that pile of sidelined money will respond to the warmth in KOSDAQ suppliers and turn into a genuine return to the Korean market.
