KOSPI triples: Korean opportunity or bubble?
The KOSPI has tripled in a year: Samsung is up 372% while the Ibex lags behind. Bubble or megatrend? The debate between passive indexing and active management.
English · Original discussion in Spanish · Published
The KOSPI has tripled in a year: opportunity or bubble in Korea?
South Korea's KOSPI index has tripled in value over the past twelve months. Anyone fully indexed to it has struck gold, but the rally doesn't come free: it has been driven by the global RAM memory crisis, which has sent Samsung soaring 372% over the same period. And it's not alone: Sandisk, without even looking to Asia, is up over 3,000%.
The Ibex 35 pales in comparison
Meanwhile, Spain's Ibex 35 has also risen nearly 50% over the past year, showing that global equities haven't been standing still. But the gap in magnitude is enormous: 3x versus 1.5x. The question is whether these returns are sustainable. Those who trinc the Korean market closely point out that it's not the only exotic case: there are ETFs for even riskier markets.
To index or not to index, that is the question
Some argue that passive indexing to the KOSPI has been a massive win, but others point out that active managers have achieved even higher returns: Intel +535%, Alphabet +284%, Deutsche Telekom +229%. The debate over fees, spreads and timing remains open. Some argue you only win when you sell, and that index funds have hidden costs.
However, optimism is not unanimous. Some warn that the thread has been quiet for months and that much of what was gained during the bubble has since been lost. Those who invested at the peak know it: when the rally deflates, the crash spares no one.
South Korea's KOSPI index has tripled in value over the past twelve months. Anyone fully indexed to it has struck gold, but the rally doesn't come free: it has been driven by the global RAM memory crisis, which has sent Samsung soaring 372% over the same period. And it's not alone: Sandisk, without even looking to Asia, is up over 3,000%.
The Ibex 35 pales in comparison
Meanwhile, Spain's Ibex 35 has also risen nearly 50% over the past year, showing that global equities haven't been standing still. But the gap in magnitude is enormous: 3x versus 1.5x. The question is whether these returns are sustainable. Those who trinc the Korean market closely point out that it's not the only exotic case: there are ETFs for even riskier markets.
To index or not to index, that is the question
Some argue that passive indexing to the KOSPI has been a massive win, but others point out that active managers have achieved even higher returns: Intel +535%, Alphabet +284%, Deutsche Telekom +229%. The debate over fees, spreads and timing remains open. Some argue you only win when you sell, and that index funds have hidden costs.
However, optimism is not unanimous. Some warn that the thread has been quiet for months and that much of what was gained during the bubble has since been lost. Those who invested at the peak know it: when the rally deflates, the crash spares no one.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (20 replies).
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