Volatility continues to rain down on the markets, but there are some shining stars in the bullish leveraged ETF arena. One particular standout is the Direxion Daily South Korea Bull 3X Shares (KORU), which is up over 100% for the year and nearly 400% within the past six months.
A confluence of factors are pushing emerging markets (EM) opportunities into the forefront as a weaker dollar, ongoing “debasement trade,” and potentially bloated U.S. mega-cap stocks are pushing more investors into international equities. With KORU providing 300% daily leveraged exposure to the MSCI Korea 25/50 Index, traders can amplify any gains to the index if the uptrend continues.
“KORU is one of if not the best-performing ETFs out there globally for the last 12 months,” said Doug Yones, CEO of Direxion, during a Bloomberg interview.
Having established that EM is providing bullish opportunities, what’s exactly driving KORU higher?
1. Semiconductor and AI Tailwinds
The artificial intelligence (AI) theme is showing no signs of waning, at least when it comes to South Korean stocks. Those that focus on the buildout of AI infrastructure stand to benefit the most, such as semiconductor leaders Samsung Electronics and SK Hynix.
These companies provide the core components that are necessary for AI servers. In the case of KORU, industry leaders like Samsung and SK Hynix were amplified by the additional 3x leverage. The AI buildout has long-term implications, which should help sustain those tailwinds through 2026 and beyond.
2. The Global Rotation and Inflow Velocity
As mentioned, various factors are working in favor of investing internationally, especially with EM providing ample growth opportunities. When it comes to South Korea, a combination of value and growth are bringing more discerning investors who aren’t just fixated on the growth factor, but want more quality as well.
Despite stubborn and sticky inflation, the presumption is that the U.S. Federal Reserve will resume its rate-cutting agenda in 2026, but with lesser velocity compared to the end of 2025. Nonetheless, any interest rate policy moves that point to a weaker dollar will benefit South Korea and EM in general.
3. Improved Corporate Governance
As noted in The Economist, the South Korean government is pouring more effort into revamping its corporate governance. For many years, family-controlled conglomerates have been trading at a significant discount relative to their global peers, thanks to inefficient governance structures, capital management, and lackluster shareholder returns.
A “corporate value-up” initiative, however, is looking to change that narrative. The goal is to implement market reforms that will prioritize shareholder value through higher dividends and aggressive buybacks. In effect, this could help draw more foreign investors to South Korean equities, which works in favor of KORU.
Though KORU’s performance was exceptional, its 3x exposure isn’t for the faint of heart. In addition to the 300% leverage, the effects of compounding and daily rebalancing make it conducive to short-term tactical trading as opposed to long-term buy-and-hold investing.
Direxion’s Education Center can equip those looking to use tactical trading tools like KORU with the knowledge to game the markets.
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