The investment signal to buy the iShares MSCI South Korea ETF (EWY) stems from a bullish thesis on the South Korean semiconductor market, particularly focusing on major players like Samsung and SK Hynex. Charan.invests highlighted that he purchased $10,000 worth of call options on EWY and has already seen a 20% gain in just one day. He pointed out that SK Hynex is trading at a forward price-to-earnings (PE) ratio under 5, indicating that the market may be underestimating the potential for earnings growth due to a cyclical memory shortage. He noted that if artificial intelligence continues to drive demand, memory could become a structural bottleneck, leading to sustained high margins and earnings surprises, similar to past trends with companies like Sandisk. Additionally, he observed that EWY is pushing into a breakout zone while other stocks are experiencing sell-offs, and he believes that the volatility of the options market is not fully reflecting the potential movement of EWY. For investors tracking charan.invests, this implies a strong short-term bullish sentiment on EWY, suggesting that they may want to consider similar positions or monitor the ETF closely for potential entry points.
When memory gets tight, the suppliers get pricing power, margins expand quickly, and earnings get surprised to the upside.