Escalating military tensions in the Middle East triggered a sharp rotation in South Korea’s exchange-traded fund (ETF) market, with leadership rapidly shifting to the energy sector. As international oil prices surged past $100 per barrel (~143,000 won), buying interest concentrated not only on crude oil but also on alternative energy products such as solar and energy storage systems (ESS). In contrast, semiconductor and artificial intelligence (AI)-related ETFs, which had led the recent market rebound, were hit by profit-taking and peak-cycle concerns, undergoing significant corrections.

According to the Korea Exchange on the 26th, the top-performing ETF in the South Korean market for the week of the 20th to the 24th was the ‘PLUS Solar & ESS’ ETF, which surged a remarkable 18.17%. It was followed by ‘TIGER Crude Oil Futures Enhanced(H)’ at 15.25%, ‘KODEX WTI Crude Oil Futures(H)’ at 15.18%, ‘KODEX Renewable Energy Active’ (12.26%), and ‘RISE U.S. S&P Crude Oil Producers (Synthetic H)’ (8.73%). These rankings exclude leveraged, inverse, and illiquid products with average daily trading volumes below 100,000 shares.

The top of the performance charts was swept by energy themes. While products investing in crude oil futures and energy companies benefited directly from the spike in international oil prices, solar, ESS, and renewable energy ETFs also rallied in tandem. As military clashes between the U.S. and Iran showed signs of becoming protracted, concerns over crude oil supply disruptions grew, simultaneously stimulating investment sentiment toward alternative energy sources. During this period, West Texas Intermediate (WTI) crude breached $90 per barrel (~129,000 won) and Brent crude surpassed $100 per barrel (~143,000 won), tracing steep upward trajectories.

Securities analysts expect international oil prices to remain elevated as long as Middle East risks persist. The combination of crude supply chain instability and declining global inventories is likely to sustain upward pressure on energy prices. Choi Jin-young, an analyst at Daishin Securities, assessed, “If ceasefire prospects re-emerge ahead of the U.S. midterm elections, oil prices could temporarily stabilize, but with ongoing Middle East supply chain instability and disruptions at Russian refinery facilities, the medium-to-long-term uptrend will be difficult to break.” He added, “If liquidity effects are factored in, oil prices could reach all-time highs sooner than expected, making it advisable to maintain a buy-the-dip perspective during short-term corrections.”

On the flip side, semiconductor ETFs dominated the bottom of the performance rankings, starkly highlighting the market’s divergence. ‘SOL Semiconductor Front-End Process’ plunged 23.93%, followed by ‘HANARO Semiconductor Core Process Leaders’ (-20.53%), ‘SOL AI Semiconductor Materials, Parts & Equipment’ (-17.24%), ‘KODEX AI Semiconductor Core Equipment’ (-15.51%), and ‘SOL Semiconductor Back-End Process’ (-14.02%), all posting double-digit losses. Amid broad weakness in the KOSDAQ market, ‘DS KOSDAQ Active’ (-17.67%), ‘TIGER KOSDAQ Active’ (-14.32%), and ‘TIME KOSDAQ Active’ (-13.37%) also delivered lackluster performances.

The synchronized weakness in semiconductor ETFs is interpreted as the result of simultaneous profit-taking following recent sharp share price gains and growing concerns that the industry cycle is peaking. Despite Intel reporting better-than-expected earnings, forecasts from global investment banks (IBs) that the memory semiconductor cycle is approaching its peak rapidly dampened investment sentiment. In particular, the heightened geopolitical risks emanating from the Middle East amplified risk-off sentiment, fueling sell-offs centered on semiconductor stocks.

Lee Kyung-min, an analyst at Daishin Securities, analyzed, “Morgan Stanley projected that the AI-driven memory industry boom is approaching an inflection point and that memory prices will peak during the fourth quarter of this year. As a result, concerns that the semiconductor cycle is passing its peak re-entered the market, driving the weakness in semiconductor stocks.”

Weekly ETF Performance Leaders and Laggards (20th–24th)

CategoryETF NameReturnTop 1PLUS Solar & ESS+18.17%Top 2TIGER Crude Oil Futures Enhanced(H)+15.25%Top 3KODEX WTI Crude Oil Futures(H)+15.18%Top 4KODEX Renewable Energy Active+12.26%Top 5RISE U.S. S&P Crude Oil Producers (Synthetic H)+8.73%Bottom 1SOL Semiconductor Front-End Process-23.93%Bottom 2HANARO Semiconductor Core Process Leaders-20.53%Bottom 3DS KOSDAQ Active-17.67%Bottom 4SOL AI Semiconductor Materials, Parts & Equipment-17.24%Bottom 5KODEX AI Semiconductor Core Equipment-15.51%

Note: Leveraged, inverse, and products with average daily trading volumes below 100,000 shares are excluded from the rankings.