This ETF Almost Doubled Last Year and It's Nearly Twice as Cheap as the S&P 500. Is It a Buy?

Group 1: Market Performance - South Korean stocks have experienced significant growth, with the iShares MSCI South Korea ETF (EWY) up 19.3% year-to-date as of January 23, 2026, and having jumped 92% in the previous year [3][10] - The overall stock market performed well in 2025, but the EWY notably outperformed the broader market [2][10] Group 2: Drivers of Growth - The surge in South Korean stocks is attributed to the AI boom and the breakout performance of major memory chipmakers, SK Hynix and Samsung, due to increased demand and rising memory prices [5][6] - A weak Korean won has also favored exports, contributing to the positive market performance [6] Group 3: Valuation and Policies - As of January 23, the EWY trades at a price-to-earnings ratio of 17, significantly lower than the S&P 500's ratio of 28, indicating a potentially undervalued market [6] - Recent shareholder-friendly policies from President Lee Jae Myung, including improved corporate governance and reduced tax rates on dividends, are expected to enhance valuations further [6] Group 4: ETF Composition - The EWY is heavily weighted towards Samsung and SK Hynix, which together account for 45% of the fund, with Samsung at 26.8% and SK Hynix at 18.3% [8] - Other notable holdings include Hyundai Motor, Kia, Hanwha Aerospace, and Naver, indicating a diverse portfolio within the ETF [9] Group 5: Future Outlook - The EWY is positioned for continued success, particularly with strong trends in the memory chip sector, although it carries risks due to the volatility of that subsector [10][11] - The fund's low valuation and strong performance suggest it may be a smart investment choice for those looking to diversify internationally [10][11]