Author: Ba Jiuling, Wu Xiaobo Channel

In South Korea, a novel form of "baby investment" is becoming popular among young parents.

Parents begin selecting investment targets as early as late pregnancy, and then open an account and place orders remotely via mobile phone the moment the baby is born.

Thus, while still in their infancy, Korean babies have become “infant shareholders” of well-known Korean companies SK Hynix and Samsung Electronics.

The bizarre actions of South Korean parents are partly related to the policies of the South Korean government.

Is it a good idea to invest in a leading semiconductor company for your baby?

Under South Korea's current Inheritance and Gift Tax Act, the tax exemption for children under 19 years of age is 20 million won every 10 years. For adult children, the tax exemption is increased to 50 million won every 10 years.

Image source: Central Daily News Chinese website

Taking advantage of the aforementioned policies, many South Korean parents begin transferring assets from the moment their child is born: they open a securities account for the child at birth and transfer 20 million won into it, then transfer another 20 million won when the child is 10 years old, and transfer 50 million won each time the child reaches adulthood at 20 and 30 years old. In this way, the child can legally and tax-free obtain 140 million won, equivalent to about US$100,000, from their parents at the age of 30.

The reason why South Korean parents choose to open stock or ETF accounts for their children instead of cash is that the gift tax is calculated based on the value at the time of the gift, and no additional taxes are levied on subsequent assets. Therefore, by buying ETFs for their children early on, they can avoid up to 50% of the South Korean inheritance tax.

According to data released by the Korea Securities Depository and Clearing Corporation, as of the end of 2025, there were 343,694 underage shareholders in South Korea, accounting for 8.19% of the total number of shareholders, with a total shareholding value of approximately 2.68 trillion won.

In December 2025, the number of accounts opened by minors in South Korea reached 34,590, nearly three times the number in January 2025. The scale of securities held indicates that transactions involving inheritance and gifts through accounts opened in children's names are quite frequent.

While we save up the red envelopes our relatives and friends give our children each year for an education fund, South Korean children have already started investing in semiconductor ETFs.

On the other hand, the rush of South Korean parents to "start raising children from a young age" is also inextricably linked to South Korea's current super bull market.

South Korea's semiconductor bull market

Over the past year, the ranking of the South Korean stock market has skyrocketed.

As of April 30, the Korea Composite Stock Price Index (KOSPI) closed at 6,598.87 points, a year-to-date increase of 56.59%. Meanwhile, the KOSPI index hit a record high on April 28, pushing the long-established capitalist country of the United Kingdom down one place to rank eighth globally.

South Korean stock market surpasses UK stock market

The surge in the South Korean stock market is attributed to two world-class semiconductor giants: SK Hynix and Samsung Electronics.

Although the South Korean KOSPI index has more than 800 constituent stocks, more than 40% of its market capitalization is concentrated in two memory chip giants, Samsung Electronics and SK Hynix.

Therefore, rather than saying that the South Korean stock market performed well, it is more accurate to say that the stock prices of these two semiconductor giants performed strongly.

As of now, SK Hynix's stock price has risen 97.54% this year, with a cumulative increase of 624.51% over the past year; Samsung Electronics' stock price has risen 83.90% this year, with a cumulative increase of 297.3% over the past year.

Image source: Sina Finance

The rapid iteration of the AI industry is the main driving force behind the soaring stock prices of the two giants.

Currently, the parameters of large AI models have reached the trillion level. The larger the parameters, the more powerful flash memory chips are needed to load large models. In the industry, this is generally referred to as "HBM high-bandwidth memory".

Meanwhile, in AI inference scenarios, the context length of large-scale user requests is constantly increasing, and the demand for high-throughput, low-latency storage systems far exceeds that of the past. Therefore, more high-performance NAND flash memory is needed to store data.

The South Korean stock market has simultaneously benefited from both of these major trends.

SK Hynix is the undisputed global leader in HBM (High Bandwidth Memory), with a market share of 62% as of the second quarter of 2025.

Looking at Samsung Electronics, its financial report shows that it has started selling mass-produced HBM4 products to Nvidia, and the next generation of HBM products is also under development. Its production capacity is expected to continue to catch up with SK Hynix, and its market share may reach about 28%.

In addition to its core business, Samsung Electronics also has a storage business. Driven by the massive demand from the AI industry, Samsung Electronics' storage business sales more than doubled quarter-on-quarter in the first quarter of 2026, and increased by a staggering 292% year-on-year, setting a new record for single-quarter sales. Overall, the company's consolidated revenue for the first quarter was $89.7 billion, a 43% increase quarter-on-quarter; operating profit was $38.83 billion, a massive 756% year-on-year increase, also a record high.

High-bandwidth memory chip model for artificial intelligence systems

When a bull market meets a frenzied investor

Besides semiconductor manufacturers making a fortune, the surge in South Korea's capital market is also inseparable from the full investment of South Korean investors. Buying semiconductors for babies is just one of the brilliant moves.

In China, investors typically go all in, which is considered a rather extreme investment style. However, in South Korea, using leverage is the norm when buying stocks.

Previously, South Korean investors preferred to invest in "US stock giants" such as Nvidia and Tesla, but now they are more willing to turn to semiconductor funds, especially leveraged ETFs.

Domestic ETF Ranking

Data from the Korea Securities Depository and Clearing Corporation on April 6 showed that since the outbreak of the Middle East war in March, the SOXL ETF, which tracks the semiconductor index and has a leverage ratio of 3x, attracted $1.2542 billion in funds, ranking first in net inflows. It was followed by leveraged products such as Nasdaq 3x (TQQQ), which is 3x long on Nasdaq, and 3x (KORU), which is 3x long on the Korean market.

In a report, Shin Seul-wi, a researcher at the Korea International Finance Center, pointed out: "The trend of aggressive investment by South Korean investors, with high-risk assets such as leveraged ETFs as the core, has intensified, and the proportion of fixed-income assets used for risk hedging has increased."

Besides leveraged stock trading, South Korean investors also like to "borrow money to trade stocks".

Yonhap News Agency reported on April 22 that the outstanding balance of margin trading in the South Korean stock market, which is the amount of money borrowed by investors to speculate in stocks, has exceeded 34 trillion won (US$23.084 billion) for the first time. Due to the significant surge in enthusiasm for leveraged investment in the stock market, several South Korean securities firms have taken emergency measures, such as raising margin requirements and suspending some leveraged trading, in an attempt to curb irrational market expansion.

Despite ongoing policy cooling measures, South Korean investors' enthusiasm for borrowing money to speculate in stocks remains undiminished. Just one day after brokerages implemented measures, South Korea's outstanding margin trading balance reached a new high, reaching 35.69 trillion won (approximately US$24.231 billion) as of April 28.

South Korean investors see this as an unprecedented super bull market in semiconductors; the more they borrow, the more they buy, and the more they earn.

Global capital embraces "HALO"

Similar to the South Korean stock market, Taiwan's stock market has also performed well recently, thanks to the rise of AI.

Before South Korea surpassed the UK, Taiwan's stock market capitalization had already surpassed that of the UK, making it the world's seventh largest capital market.

Compared to the two giants in the South Korean stock market, the Taiwan stock market is dominated by TSMC.

On Monday, April 27, TSMC's stock price touched the NT$2,330 mark, setting a new all-time high. As of May 1, TSMC's stock price had risen 32.21% this year and 140.80% in the past year, with a market capitalization of approximately US$1.75 trillion. In comparison, the total market capitalization of the Taiwan stock market was only US$4.47 trillion.

Semiconductor chips manufactured by TSMC

In its 2025 annual report, TSMC emphasized that the AI market continues to develop rapidly, especially with the rise of large language models (LLMs) significantly driving the growth in computing power demand. Enterprise-level AI and sovereign AI applications are also expanding simultaneously, becoming an important driver of long-term demand in the semiconductor industry.

Currently, almost all core AI computing chips worldwide, whether GPUs or AI-based dedicated chips, must be manufactured using TSMC's advanced processes to achieve physical existence.

The strong performance of the stock markets in Taiwan and South Korea is due to their success in capitalizing on the current hottest market trend – “HALO assets”.

In February 2026, Goldman Sachs, based on the global wave of artificial intelligence and geopolitical uncertainties, proposed to find hard assets that are physically difficult to replace and will not be easily disrupted by AI technology, namely "HALO". Typical areas include energy and utilities, basic resources and materials, transportation infrastructure and high-end manufacturing equipment.

The stock markets of South Korea and Taiwan possess high-end chip manufacturing industries that represent "HALO assets" while also playing the role of "shovel sellers" in the AI wave.

Furthermore, with the outbreak of the US-Iran conflict, "HALO" has also become a tool for hedging global systemic risks—more and more capital is trying to avoid the systemic risks of the past "US-centric" approach and seek more "scarce" assets.

Julian Albertini, manager of First Eagle Investment Fund, which manages $72 billion in assets, once pointed out: "Energy security, defense, and supply chain resilience have become the core of national strategic autonomy, which has driven a large-scale rebalancing of global capital from 'financial assets' in the United States to 'real assets' in non-US regions."

In short, he believes that the era of American global dominance and financial exploitation is coming to an end. Now, the core survival goal for countries around the world is no longer "making quick money through finance following the US," but rather three crucial issues concerning national survival: energy security, national defense security, and supply chain security.

The search for "HALO" assets has also reached the A-share market.

A macro analyst at CICC Research believes that "HALO trading" is a trading frenzy where global funds are seeking new anchors after the old order has loosened, and the fact that Chinese assets have become safe-haven assets is a concrete manifestation and deepening of this frenzy in the Chinese market.

Yang Chao, chief strategist at China Galaxy Securities, believes that the global capital market's repricing of "certainty and scarcity" in a highly uncertain environment has endowed Chinese assets with the attributes of "safe assets."

It is worth mentioning that the "safety attribute" of Chinese assets stems more from the macro system level, and the pricing basis lies in the industrial integrity, policy space and domestic demand resilience of the economy, which is a reassessment of "system stability and growth certainty".

Conclusion

However, whether betting on the AI wave or actively embracing "HALO," behind the market frenzy, there are also heavyweight figures who have maintained rationality and sobriety.

Warren Buffett, who has stepped back from the spotlight, told the media during a break at the Berkshire Hathaway shareholders meeting the day before yesterday that "the current investment environment is not ideal" and that the real buying opportunity will come when the market panics to the point where "no one answers the phone".

The latest financial report shows that Berkshire Hathaway held a record $397 billion in cash reserves in the first quarter.

Berkshire Hathaway's new CEO, Abel, also emphasized: "We will not use AI for the sake of AI; AI must create real value for the business."

He reiterated Berkshire Hathaway’s five cornerstones: a safety cushion of cash and government bonds, financial independence, flexible asset allocation, efficient taxation, and the elimination of arrogance, bureaucracy, and complacency.

Some investors may think that global investors are embracing "HALO" and AI, while Buffett and his followers are getting old.

But investment guru Howard Marks once said a wise saying: "Buying good assets at the peak of optimism often means disaster."

Therefore, in the pursuit of "HALO", maintaining a degree of composure may be the rarest quality in this so-called feast of scarcity.

South Korean stocks and the MSCI Asia Pacific Index hit record highs, while SK Hynix surged to a new record high.

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