EWY, which holds Korean stocks but trades in the U.S., fell more than twice as much as the KOSPI. The KOSPI was -6%, but EWY was -14% — aren't they both Korean stocks? Why does buying through the U.S. mean more pain?

EWY -14.10% vs. KOSPI -5.95%: They Are Not the Same Korean Stocks

The numbers look strange at first. The KOSPI fell -5.95% (having briefly hit -8.40% intraday before recovering partially after the circuit breaker), yet EWY (iShares MSCI Korea ETF) was down -14.10% — more than twice the decline. They hold the same Korean companies, so why such a large difference?

The First Cause of the Gap: Currency

EWY is an ETF that trades in dollars. When an investor buys EWY, they are effectively buying two things simultaneously: Korean stocks + the Korean won. When the won depreciates, the dollar-denominated price of EWY falls even if Korean stocks are flat.

Today, USD/KRW stood at KRW 1,551.68 — a 17-year high (lowest level of the won on record). In simple terms, a 5% won depreciation causes EWY's dollar NAV to fall 5% regardless of Korean stock price movements (BitMEX Blog, 2026). Add KOSPI -6% to won depreciation on top of that, and a -10%+ figure in dollar terms is mathematically constructed.

The Second Cause: Structural ETF Discount

In crisis situations, ETFs often trade at a discount to their NAV (net asset value). This is the premium/discount. On a day like today — when the Korean market triggers a circuit breaker and foreigners are selling aggressively — EWY also faces heavy redemption pressure. While ETF market makers (authorized participants) use arbitrage to align prices with the underlying, that mechanism slows during periods of extreme volatility. The result is that EWY can fall by a wider margin than its actual NAV.

BlackRock's EWY recorded a large net outflow of approximately $970M today (TradingKey, 2026). That scale of selling pressure further compressed the ETF price in a market already in decline.

The Third Cause: Constituent Weighting

EWY does not hold the entire KOSPI. It tracks the MSCI Korea 25/50 Index, where Samsung Electronics and SK Hynix together represent roughly 40–45% of the ETF. On a day when the semiconductor ETF (SMH) posted the worst decline of any sector (-9.22%), EWY was structurally predestined to fall more than the broad KOSPI — exactly because of its semiconductor concentration.

Summarizing EWY's P&L Structure

Is Buying Korean Stocks via U.S.-Listed ETFs Structurally Disadvantageous?

Not normally. Over the January–May period this year, EWY performed comparably to KOSPI, and during strong dollar phases, dollar-converted returns were sometimes lower. However, on days when won weakness + equity decline + volatility surge occur simultaneously, it is structurally inevitable that dollar-denominated EWY losses significantly exceed KOSPI losses.

This is an important asymmetry in a crisis phase like today's where "strong dollar / weak won" dynamics play out in the extreme. From a foreign investor's perspective, holding Korean stocks in dollar terms is close to a leveraged structure — equity risk compounded by FX risk.

What Should Investors Do?

EWY holders should not simply expect "KOSPI rebound = EWY rebound." Without a concurrent won recovery, even a KOSPI rally will produce limited dollar-denominated gains. Conversely, if the won recovers alongside a KOSPI rebound, the two effects compound and EWY could rise far more than the KOSPI itself. EWY is effectively Korean equities with FX leverage attached. Judging the timing of won recovery is the key to EWY entry timing. The re-entry opportunity for EWY becomes meaningful when the conditions for a USD/KRW recovery toward the KRW 1,450–1,480 range (Iran tensions ease, Fed rate hike expectations recede) become visible.