Semiconductor SoBuJang ETF Rally Expected to Continue This Month

20-30% Surge in a Month... SOL Semiconductor Front-End Process Leads Returns
Semiconductors "Samsungh Electronics and SK hynix" Scaled Back, SoBuJang Composition Boosted by Rebalancing
18 Trillion Won Rebalancing Set for This Month... Centered o

Over the past month, ETFs (Exchange Traded Funds) focused on semiconductor materials, components, and equipment (known as "So-Bu-Jang") have dominated the top tier of returns in the domestic ETF market, posting high yields of 20–30 percent. Following an inflow of capital into these So-Bu-Jang stocks during last month’s ETF periodic rebalancing, which drove up share prices, further upside is expected this month, as a major rebalancing of semiconductor ETFs worth 18 trillion won has also been announced, signaling ongoing supply-demand momentum as a tailwind.

According to ETFCheck on October 2, the SOL Semiconductor Front-End Process ETF surged 32.45 percent over the past month, ranking first among all domestic ETFs except for leveraged and inverse products in terms of returns. Other semiconductor process and So-Bu-Jang ETFs also saw their prices rise by more than 20 percent, placing in the leading ranks: ▲ HANARO Essential Semiconductor Process Leaders (30.32%), ▲ SOL AI Semiconductor So-Bu-Jang (28.41%), ▲ KODEX AI Semiconductor Core Equipment (27.13%), and ▲ SOL Semiconductor Back-End Process (26.68%). In contrast, the KOSPI index rose only by around 1 percent during the same period.

This strong performance by So-Bu-Jang ETFs is attributed to capital inflows from last month’s semiconductor ETF rebalancing. Last month, ETFs tracking the KRX Semiconductor Index, such as KODEX Semiconductor and TIGER Semiconductor, reduced their weightings for Samsung Electronics and SK hynix, which had exceeded single-stock limits, and increased their allocations to So-Bu-Jang names including Hanmi Semiconductor, Jusung Engineering, EO Technics, and DB HiTek.

Securities industry analysts expect this robust trend for So-Bu-Jang ETFs to persist into this month, as another large-scale semiconductor ETF rebalancing is scheduled. According to Samsung Securities, the total value of ETFs subject to rebalancing in October amounts to 23.2 trillion won, with semiconductor-related ETFs making up the majority at 18.1 trillion won.

Because Samsung Electronics has exceeded the cap for individual stock weighting, funds are expected to be shifted out of Samsung Electronics and into So-Bu-Jang stocks. Within the 10 trillion won TIGER Semiconductor TOP10 ETF, Samsung Electronics currently accounts for 27.1 percent, 2.1 percentage points above the 25 percent cap. Similarly, the SOL AI Semiconductor TOP2 Plus ETF, worth over 5 trillion won, stands at 24.5 percent, near the cap. As a result, roughly 200 billion won in sell orders for Samsung Electronics are expected during this rebalancing. Jeon Gyun, research analyst at Samsung Securities, said, "Around 200 billion won in sales orders for Samsung Electronics may be issued in these related ETFs to adjust the per-stock cap. Meanwhile, semiconductor So-Bu-Jang companies such as Hanmi Semiconductor, Jusung Engineering, Isu Petasys, and Wonik IPS are expected to see additional inflows of about 20 billion won each as their weights are increased in response to the reduction in Samsung Electronics’ share."

In contrast, SK hynix is currently below its cap, and thus is expected to see capital inflows. Jeon added, "SK hynix is below its per-stock cap in most ETFs, so it is expected to absorb part of the funds from selling Samsung Electronics. Additional buy demand for SK hynix could be around 90 billion won, and SK Square is also projected to attract around 80 billion won in extra purchases."

Meanwhile, it should be noted that the ETF rebalancing this month is expected to be concentrated on October 8—the options expiration date—so investors should be cautious about increased market volatility. Jeon pointed out, "Most ETFs carrying out rebalancing this month are scheduled for their periodic adjustment dates on the business day following the October options expiration or on the first business day of the week after options expiry. Given the October holiday schedule, the actual rebalancing of these ETFs is likely to be concentrated on October 8, the options expiration date, and on that day, investors should watch for heightened price volatility due to supply-demand disruptions in the stock market."

This content was produced with the assistance of AI translation services.