Heavy reliance on market benchmark Samsung, tariff impacts create favorable environment for stock pickers
The South Korean stock market’s diverged performance, also known as equity dispersion, stands out among global peers, driven by its heavy reliance on tech giant Samsung Electronics and the impact of US tariffs, according to an executive at S&P Dow Jones Indices.
Equity dispersion refers to the degree of divergence in returns among individual stocks within the same market. While the overall market may move up or down in response to macroeconomic data releases and events, individual stocks move in different directions depending on company- or sector-specific factors. The more they move in different directions, the higher the equity dispersion.
“Equity dispersion in the Korean stock market stood out as the highest among global peers, far exceeding other markets,” said Sue Lee, APAC head of Index Investment Strategy at S&P DJI, in a recent interview held with The Korea Herald in Seoul.
According to S&P DJI data, the average index dispersion for the S&P Korea Broad Market Index — which tracks the overall performance of Korean equities — was 41 percent in the first half of 2025.
By comparison, dispersion for the S&P Global BMI was 30 percent, while the figure for the S&P 500 stood at 28 percent during the same period.
Lee noted the Korean stock market’s heavy concentration on its market heavyweight, Samsung Electronics, as an important contributor to the large divergence in stock performance.
"Samsung Electronics, which accounts for nearly 20 percent of Korea’s main index, plays a key role in the widening dispersion. While small- and mid-cap stocks also diverged in their performance, the outsized influence comes from Samsung Electronics moving differently from the broader market," she said.
The same goes for the Taiwanese stock market with its heavy reliance on chip giant TSMC, Lee explained.
“TSMC accounts for about 40 percent of the market, so the performance of the broader index is strongly correlated with how well TSMC is doing compared to the benchmark,” she said.
The US administration's tariff policy also triggered heightened market dispersion for Korea and the rest of the world, Lee added.
“Since tariffs affect industries differently, some sectors suffered setbacks while others benefited, driving wider divergence across stocks. In Korea, shipbuilding shares surged with the renewed investment push amid tariff dynamics, while other sectors lagged,” she said.
Though the heightened stock divergence creates a favorable environment for stock pickers, making active funds more attractive, Lee warned against potential underperformance.
“Being in the right environment for stock picking and actually outperforming in that environment is another story. If investors make the wrong choices, they may end up underperforming despite the opportunities, and the results could be worse. It is a market where the skill of active managers really shows,” she said.
Having worked as an equity derivatives strategist at top investment banks, including Merrill Lynch and JP Morgan, Lee runs the Index Investment Strategy team at S&P DJI and is responsible for providing research and commentary on the capital market.
silverstar@heraldcorp.com
