The first KOSPI 200 ETF on HKEX has arrived. But is it the best way to invest Korea?

• Korea's KOSPI 200 has returned more than 140% in 2026, driven primarily by the AI investment cycle and strong demand for memory chips.

• The launch of CSOP KOSPI 200 ETF (HKEX: 3121) gives investors the first HKEX-listed vehicle providing direct exposure to the KOSPI 200.

• Compared with our recommended ETF for Korean equities, 3121 offers similar exposure but charges a much higher 0.99% annual fee versus 0.09%.

• For investors whose conviction is the Asia semiconductor cycle specifically, Global X Asia Semiconductor ETF (HKEX: 3119) delivers purer thematic exposure across Korea, Taiwan, Japan and China at a lower fee of 0.68%.

• The Franklin FTSE South Korea ETF (NYSE: FLKR) remains our preferred vehicle for broad Korea exposure; 3119 remains our top pick for the Asia semiconductor thesis.

Korea: One of the biggest beneficiaries of the global AI buildout

Korean equities have been among the strongest performers globally in 2026, with the KOSPI 200 returning more than 140% since the start of the year.

Figure 1: KOSPI 200 year-to-date performance in 2026

The rally has been driven by the global AI investment cycle, which has fuelled demand for high-bandwidth memory (HBM) and advanced logic chips, directly benefiting Korea's two semiconductor leaders, Samsung Electronics and SK Hynix. With HBM supply still constrained and AI infrastructure spending accelerating, Korea sits at the centre of one of the most powerful themes in global technology.

The investment case is also broadening beyond the two memory champions. Korean technology companies across the supply chain are taking on larger roles in AI deployment. NVIDIA has announced plans to build an AI factory with LG Electronics to support physical AI and data centre development, collaborate with Hyundai Motor on autonomous driving technologies, and develop agentic AI capabilities with Naver. As these initiatives move towards commercialisation, they create additional earnings drivers for KOSPI constituents and expand Korea's participation across the global AI value chain.

Despite the strong rally, valuations remain undemanding. The KOSPI 200 trades at around 9.5x forward earnings, compared with 22x for the S&P 500. The valuation gap remains wide even after this year's gains, leaving room for further re-rating. Structural reforms are also helping to narrow the long-standing Korea Discount. President Lee Jae-myung's capital market agenda, including mandatory value-up programmes and restrictions on dual listings between parent and subsidiary companies, is gradually lowering the equity risk premium and improving market quality.

Against this backdrop, the CSOP KOSPI 200 ETF (HKEX: 3121) made its timely debut on 18 June 2026, arriving as investor interest in Korean equities continues to strengthen.

Related article: Upgrade to 4 Stars: Can Narratives Beyond Memory Become the New Catalyst for South Korea Market?

The first KOSPI 200 ETF on HKEX — what you need to know

The key attraction of CSOP KOSPI 200 ETF (HKEX: 3121) lies in its accessibility. Before its launch, Hong Kong investors had no HKEX-listed vehicle offering direct exposure to the KOSPI 200. Alternatives such as US-listed ETFs or Korean domestic funds require either USD accounts or cross-border access. By listing in Hong Kong and trading in HKD, 3121 provides the simplest route for HKD-based investors to gain broad exposure to Korean equities.

The fund tracks the KOSPI 200 Net Total Return Index through full replication, holding all 200 constituents without any position limits. The index comprises Korea's largest and most liquid companies and is weighted by free-float market capitalisation. With Samsung Electronics and SK Hynix as its two largest holdings, investors gain direct exposure to companies at the centre of the global AI investment cycle while maintaining broad participation across the wider Korean market.

Initial market reception has been encouraging. Trading volume exceeded KRW30 billion within the first five minutes of the fund's debut session. The strong start points to healthy investor interest and underscores demand for participation in Korea's AI-driven growth story.

3121 vs FLKR — similar exposure, very different cost

Compared with our current recommended Korean equity ETF, the Franklin FTSE South Korea ETF (NYSE: FLKR), 3121 provides exposure to a broadly similar universe of Korean large- and mid-cap stocks. With their mandates largely aligned, cost and portfolio construction emerge as the key points of differentiation.

Table 1: 3121 and FLKR offer similar Korean equity exposure but differ in structure and cost

	CSOP KOSPI 200 ETF (HKEX: 3121)	Franklin FTSE South Korea ETF (NYSE: FLKR)
Issuer	CSOP Asset Management	Franklin Templeton
Exchange	HKEX	NYSE Arca
Unit Price	HKD 8.05	USD 71.69
Board Lot Size	100	1
Benchmark	KOSPI 200 Net Total Return Index	FTSE South Korea RIC Capped Index
No. of Holdings	199	162
Replication	Full replication	Full replication / Representative sampling
Rebalancing Frequency	Quarterly	Semi-Annually
Management Fee	0.99% p.a.	0.09% p.a.
Ongoing Charges	Estimated to be 1.80% p.a.*	0.09% p.a.
AUM	New launch	USD 1.13 billion
Inception Date	18-Jun-26	2-Nov-17
*Note: As 3121 is newly set up, this figure is a best estimate only and represents the sum of the estimated ongoing charges over a 12-month period, expressed as a percentage of the estimated average NAV over the same period. It may be different upon actual operation of the ETF and may vary from year to year. For the first 12-month period from the launch of the ETF, the ongoing charges figure is capped at 2% of the average ‎NAV of the ETF. Source: CSOP Asset Management, Franklin Templeton. Data as of 19 June 2026.

Cost is the most obvious differentiator.  FLKR's total expense ratio is just 0.09% per annum, among the lowest for any single-country ETF globally. By comparison, 3121's estimated ongoing charges stand at 1.80% per annum, reflecting not only its 0.99% management fee but also the higher operating costs. The 171 basis point gap compounds materially over time and represents a meaningful cost disadvantage for long-term investors.

Portfolio construction is the second major difference. Both funds have large exposures to Korea's two memory champions, but to different degrees. Accounting for Samsung Electronics’ ordinary and preferred share lines as a single issuer, FLKR’s combined Samsung and SK Hynix exposure is notably lower than that of 3121. The ordering of the top two names also differs — a divergence that reflects the structural difference in index construction between the two funds.

Table 2: Both funds are concentrated in Samsung Electronics and SK Hynix, with 3121 carrying higher top two concentration

Rank	CSOP KOSPI 200 ETF (HKEX: 3121)	Weight	Franklin FTSE South Korea ETF (NYSE: FLKR)	Weight
1	Samsung Electronics Co Ltd	34.23%	SK Hynix Inc	33.95%
2	SK Hynix Inc	30.15%	Samsung Electronics Co Ltd	20.27%
3	SK Square Co Ltd	3.19%	SK Square Co Ltd	4.00%
4	Samsung Electro-Mechanics Co Ltd	2.50%	Samsung Electro-Mechanics Co Ltd	3.18%
5	Hyundai Motor Co	1.67%	Samsung Electronics Co Ltd (Preferred)	2.18%
6	KB Financial Group Inc	1.01%	Hyundai Motor Co	2.13%
7	Samsung C&T Corp	0.96%	KB Financial Group Inc	1.52%
8	Doosan Enerbility Co Ltd	0.88%	Doosan Enerbility Co Ltd	1.15%
9	Shinhan Financial Group Co Ltd	0.85%	Shinhan Financial Group Co Ltd	1.12%
10	Samsung Life Insurance Co Ltd	0.81%	Hanwha Aerospace Co Ltd	1.05%
Total		76.26%		70.55%
Source: Bloomberg Finance L.P., iFAST Compilations Data as of 18 June 2026.

FLKR's underlying FTSE South Korea RIC Capped Index limits individual stock weights to 25% at each rebalance. Samsung Electronics, being the larger company by free-float market capitalisation, is therefore trimmed back periodically. SK Hynix's current higher weight reflects its stronger share price performance between rebalancing dates. By contrast, 3121 does not impose any position limits, preserving the natural free-float weighting of the market with Samsung Electronics remaining the largest constituent. The result is greater single-stock concentration and higher overlap for investors who already hold either company directly.

Ultimately, the choice between the two funds comes down to access and cost. For investors with HKD accounts who prefer to trade on HKEX, 3121 offers a convenient alternative. For investors with access to NYSE Arca, FLKR's significantly lower fee structure remains a decisive advantage. FLKR also benefits from a nine-year track record and approximately USD1.13 billion in assets under management, providing a level of scale and liquidity that 3121, as a newly launched fund, has yet to establish.

For investors seeking exposure to Asia semiconductors, consider the Global X Asia Semiconductor instead

Investors attracted to Korean equities in 2026 are, in many cases, attracted by one theme: semiconductors. The sector accounts for approximately 66% of the KOSPI 200 and has been the primary driver of the index's strong performance. That raises an important portfolio consideration. For investors whose conviction lies specifically in the Asian semiconductor supply chain, a broad Korea index is not necessarily the most efficient way to express that view.

The reason is straightforward. Owning the KOSPI 200 also means owning banks, automakers, steelmakers, industrials and consumer companies whose earnings are less directly tied to the AI chip cycle. While these sectors provide diversification, they dilute exposure to the semiconductor theme. Investors seeking more targeted participation in AI infrastructure spending are therefore better served by a dedicated semiconductor strategy.

We continue to prefer the Global X Asia Semiconductor ETF (HKEX: 3119) as our primary vehicle for expressing the Asian semiconductor cycle. The fund holds 40 semiconductor companies across Korea, Taiwan, Japan and China, spanning integrated circuit design, foundries, semiconductor equipment and materials. Key holdings include SK Hynix, Samsung Electronics, TSMC, MediaTek and Sony Group. The result is more concentrated exposure to the companies most directly leveraged to AI-related semiconductor demand.

The advantages extend beyond thematic purity. Unlike 3121, which concentrates exposure in a single market and currency, 3119 provides access to multiple semiconductor ecosystems across North Asia. This broadens geographic exposure while reducing single-country concentration risk. The fund also charges an annual management fee of 0.68%, below 3121's 0.99%, and benefits from an established asset base of approximately HKD 855 million and an active trading history. For investors seeking targeted exposure to the Asian semiconductor cycle, we believe 3119 remains the more compelling choice.

Related article: Tap into Asia’s semiconductor growth through the Global X Asia Semiconductor ETF (HKEX:3119)

Three funds, one conclusion

The launch of 3121 is a meaningful addition to the HKEX ETF landscape. As the only HKEX-listed vehicle providing direct access to the KOSPI 200, it fills a longstanding gap for investors seeking broad exposure to Korean equities through Hong Kong.

The choice between the three vehicles ultimately depends on the underlying investment thesis. For broad Korean equity exposure, FLKR remains our preferred option, offering a comparable mandate at a fraction of the cost for investors with access to USD account. For investors whose conviction lies specifically in the Asian semiconductor cycle—the dominant driver of Korean equities in 2026—we continue to favour  3119. Its focused semiconductor exposure, broader geographic diversification and lower fee structure provide a more efficient way to participate in the region's AI-driven growth story.

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report — including all investment theses, ratings, price targets and conclusions — has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.