Long Nasdaq and short South Korea tech
The guest argued for a relative value trade going long the Nasdaq 100 and shorting South Korea's KOSPI index due to extreme concentration and cyclicality in Korean chipmakers.
The argument
The guest pointed out that the Korean KOSPI index has run hot on the back of the AI memory super cycle, driven almost entirely by Samsung and SK Hynix. This leaves the index highly vulnerable to cyclical stumbles and geopolitical risks in the US-China technology fracture, whereas the Nasdaq 100 offers broader structural diversification.
The thesis, stress-tested
✓ What validates it
- ✓South Korean implied volatility normalizes back to historical levels
- ✓Samsung or SK Hynix earnings or guidance stumbles
▸ Risks discussed
- ▸South Korean implied volatility has doubled recently, introducing sizing and volatility-matching risks
- ▸The AI memory super cycle could continue to rip, causing the KOSPI to keep outperforming
Hear it yourself
"And if the markets turn lower, the downside likely to be more severe in South Korea. So to illustrate the trade, I wanted to express this divergence through a straightforward long short relative value setup. Long US tech via the Nasdaq 100 QQQ and short South Korea via the EWI ETF."
00:00 / 00:23
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE