Korea and Taiwan arrive on SGX: the first ETFs for both ends of the AI supply chain

• Why Korea and Taiwan: Korea and Taiwan sit at critical AI hardware bottlenecks, with Taiwan leading in advanced logic and packaging and Korea in memory.

• AI spending supports both markets: The top four hyperscalers are guiding for USD 720–745 billion of 2026 capex, approximately 80% above 2025, with spending heading towards USD 1 trillion in 2027.

• KOR and TWD bring both markets to SGX: iFAST, in partnership with DWS Asset Management, is launching the first SGX-listed ETFs providing dedicated exposure to South Korea and Taiwan.

• MSCI 20/35 gives greater weight to market leaders: Its 35% group limit allows higher concentration in leaders such as TSMC at 29.4% and Samsung Electronics at 27.3%, versus the 20% FTSE constituent cap.

• SGX trading lowers practical barriers: KOR and TWD trade in SGD with an SGD 1 issue price and one-share board lot, while expected SRS eligibility provides another route to invest in the two markets.

Taiwan and Korea capture both sides of the AI hardware cycle

Taiwan and Korea sit at two critical bottlenecks in the AI hardware supply chain, making them key beneficiaries of the global AI investment cycle. Much of the spending behind AI infrastructure ultimately flows through Taiwan's advanced logic and packaging capabilities and Korea's memory supply before reaching a data centre.

The AI capex uptrend remains intact, with the top four hyperscalers guiding for USD 720–745 billion of capex in 2026, up approximately 80% year on year, after all four raised their guidance following 2Q results. Spending is also heading towards USD 1 trillion in 2027. Google estimates AI server payback at under two years, while Nvidia's supply-constrained outlook points to hardware availability, rather than demand, as the key determinant of deployment pace. This supports continued demand for Taiwan's advanced chips and packaging and Korea's memory, with capacity in both markets increasingly determining how quickly AI infrastructure can scale.

Taiwan owns the foundry and packaging bottleneck. TSMC recorded a monthly revenue high of USD 16.1 billion in August, while its 2Q26 gross margin reached a record 67.7%. Strong demand has supported planned 2027 price increases, with its N2 capacity reportedly booked through 2028. Capacity constraints extend beyond advanced logic, with CoWoS packaging sold out and lead times reaching 78 weeks. This reinforces Taiwan's strategic importance across the AI supply chain, with the country's exports reaching a record USD 82.4 billion in August. Electronic components and information and communications products, which include semiconductors and AI servers, accounted for 79.3% of total exports.

Korea complements Taiwan through its leadership in memory semiconductors, particularly high-bandwidth memory (HBM), which is critical to AI accelerators. Samsung Electronics and SK Hynix collectively held 83% of global HBM market share in 2Q26, while rising DRAM and NAND prices have supported earnings growth. Long-term supply agreements covering 60–70% of Samsung's DRAM and NAND capacity, alongside SK Hynix's agreements with around 10 key customers, provide greater demand visibility. Korea's domestic data-centre pipeline, targeting potential capacity of 18.4GW by 2035, provides an additional source of memory demand beyond global hyperscaler spending.

Together, Taiwan and Korea provide complementary exposure to the AI hardware cycle, with Taiwan leading in advanced logic and packaging and Korea in memory. Strong AI infrastructure spending, constrained supply and greater customer visibility support the earnings outlook for both markets, while their distinct positions across the hardware stack provide exposure to different parts of the same structural growth cycle.

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KOR and TWD are the first SGX-listed gateways to both markets

For Singapore investors, accessing Korea and Taiwan has typically required investing through overseas markets. Direct investment requires an overseas brokerage account, while US- and European-listed ETFs trade in foreign currencies and during overseas market hours. Prior to KOR and TWD, there were no pure, single-market ETFs listed on SGX providing dedicated exposure to either Korea or Taiwan.

iFAST, in partnership with DWS Asset Management, is introducing the iFAST Xtrackers MSCI Korea UCITS Index ETF (SGX: KOR) and iFAST Xtrackers MSCI Taiwan UCITS Index ETF (SGX: TWD), the first SGX-listed ETFs providing dedicated exposure to the two markets. Both ETFs trade in SGD during Singapore market hours, eliminating the need for manual currency conversion at the point of trade. Their trading hours also overlap with the Korean and Taiwanese markets, allowing market makers to reference live underlying share prices when pricing the ETFs. This reduces uncertainty in estimating fair value and can support tighter bid/ask spreads while the underlying markets are open. A one-share board lot also allows investors to build positions incrementally. Following listing, the ETFs are expected to be eligible for SRS, providing an additional avenue for investors to deploy SRS monies into long-term exposure to Korea and Taiwan.

Table 1. KOR and TWD trade in SGD with a one-share board lot

	iFAST Xtrackers MSCI Korea UCITS Index ETF	iFAST Xtrackers MSCI Taiwan UCITS Index ETF
Benchmark	MSCI Korea 20/35 Custom Index	MSCI Taiwan 20/35 Custom Index
SGX code	SGX: KOR	SGX: TWD
Issue price	SGD 1	SGD 1
IOP and listing	1 to 14 Oct; listing 22 Oct 2026	1 to 14 Oct; listing 22 Oct 2026
Trading currency	SGD	SGD
Board lot	1 share	1 share
Management fee	0.25% p.a.	0.25% p.a.
Estimated total expense ratio	0.67% p.a.	0.77% p.a.
Distribution policy	Accumulating	Accumulating
Classification	Excluded Investment Product	Excluded Investment Product
Subscription mode	Cash during IOP; SRS after listing	Cash during IOP; SRS after listing
Source: Product Highlights Sheets. iFAST Compilations. Data as of 29 September 2026.

The MSCI 20/35 indices give KOR and TWD heavier exposure to the leaders

KOR and TWD offer differentiated exposure from the Korea and Taiwan ETFs in our ETF focus list, namely the Franklin FTSE South Korea ETF (FLKR) and Franklin FTSE Taiwan ETF (FLTW). The difference comes from their respective index concentration rules. The MSCI Korea 20/35 and MSCI Taiwan 20/35 Custom indices allow the largest group entity to account for up to 35%, with other entities capped at 20%. In contrast, the FTSE South Korea and FTSE Taiwan RIC Capped indices cap every constituent at 20% and limit the aggregate weight of constituents above 4.5% to 48%.

Table 2. MSCI Korea 20/35 weights Samsung more and SK Hynix less than the FTSE index

MSCI Korea 20/35 (KOR)	Weight (%)	FTSE South Korea RIC Capped (FLKR)	Weight (%)
Samsung Electronics	27.3	SK Hynix	19.6
SK Hynix	14.2	Samsung Electronics	18.0
SK Square	4.3	SK Square	4.4
Samsung Electro-Mechanics	3.7	Samsung Electro-Mechanics	3.0
Samsung Electronics (pref.)	3.4	KB Financial Group	2.7
KB Financial Group	2.8	Hyundai Motor	2.5
Hyundai Motor	2.4	Samsung Electronics (pref.)	2.3
Shinhan Financial Group	2.0	Shinhan Financial Group	2.0
Doosan Enerbility	1.7	Hana Financial Group	1.6
Hana Financial Group	1.7	NAVER	1.5
Number of constituents	77	Number of constituents	155
Source: MSCI, FTSE Russell, iFAST Compilations. MSCI data as of 31 August 2026; FTSE data as of 31 July 2026

In Korea, the additional weight is concentrated in Samsung Electronics. Samsung Electronics accounts for 27.3% of the MSCI Korea 20/35 Index, while its ordinary and preferred shares, together with Samsung Electro-Mechanics, account for 34.3%, close to the 35% group limit. SK Hynix has a 14.2% weight in KOR, below its 19.6% weight in FLKR, where it is the largest position. The two Korea ETFs therefore provide different allocations to the country's two leading memory producers: KOR has greater exposure to Samsung, while FLKR places more weight on SK Hynix.

Table 3. MSCI Taiwan 20/35 lets TSMC reach 29.4%, above the 20% FTSE cap

MSCI Taiwan 20/35 (TWD)	Weight (%)	FTSE Taiwan RIC Capped (FLTW)	Weight (%)
TSMC	29.4	TSMC	20.0
MediaTek	8.3	MediaTek	8.5
Delta Electronics	5.3	Delta Electronics	5.3
Hon Hai Precision	4.5	Hon Hai Precision	4.5
ASE Technology	2.9	ASE Technology	2.9
Elite Material	2.3	Elite Material	2.4
United Microelectronics	2.1	United Microelectronics	2.2
Unimicron Technology	2.0	Unimicron Technology	2.0
Fubon Financial Holdings	1.8	Fubon Financial Holdings	1.8
Nan Ya Plastics	1.7	Nan Ya Plastics	1.8
Number of constituents	77	Number of constituents	132
Source: MSCI, FTSE Russell, iFAST Compilations. Data as of 31 August 2026

In Taiwan, the additional room is largely taken up by TSMC. At 29.4% of the MSCI Taiwan 20/35 Index, TSMC's weight is more than 9 percentage points above the 20% FTSE cap. Alongside MediaTek, Delta Electronics, Hon Hai and ASE, the top five constituents account for approximately half of the index, giving TWD greater exposure to Taiwan's largest technology companies.

Is the SGX-listed South Korea and Taiwan ETF right for you?

The choice between KOR and TWD and their US-listed counterparts, FLKR and FLTW, comes down to the balance between diversification, cost, and access. The FTSE indices hold roughly twice as many stocks as the 77 constituents in each MSCI index, spreading single-stock exposure more broadly, while FLKR and FLTW have lower expense ratios. For investors who prioritise broader diversification and lower ongoing costs, FLKR and FLTW remain our preferred ETFs.

KOR and TWD, in contrast, provide greater exposure to market leaders while offering the convenience of local access. The higher concentration cuts both ways: TSMC accounts for 29.4% and Samsung Electronics 27.3% of their respective MSCI indices, meaning movements in these companies have a larger impact on index performance than under the FTSE indices. A rally can therefore contribute more to returns, while a sell-off can have a larger negative impact.

Beyond index construction, KOR and TWD also offer practical advantages for Singapore investors. Although their expense ratios are higher, the SGX-listed structure removes the need to convert SGD into foreign currency when purchasing the ETFs. Both trade in SGD during Singapore market hours, while a one-share board lot and SGD 1 initial issue price allow investors to start with a small position or invest regularly. Their expected SRS eligibility also gives investors another avenue to invest idle SRS monies for potential long-term growth.

Fund domicile is another consideration. FLKR and FLTW are US-domiciled ETFs, so dividends paid to Singapore investors are generally subject to 30% US withholding tax. US-domiciled ETFs can also expose non-US investors to US estate-tax considerations, with the filing threshold for non-resident non-citizens set at USD 60,000 of US-situated assets. KOR and TWD are Singapore-domiciled funds, avoiding these US investor-level tax considerations associated with direct ownership of US-domiciled ETFs.

For investors who have been attracted to Taiwan's foundry and packaging capabilities and Korea's memory leadership but held back by foreign-currency and overseas trading considerations, KOR and TWD bring both markets closer to home. Trading in SGD during Singapore market hours, with a one-share board lot and SRS eligibility, the new SGX listings make it easier to gain direct exposure to two critical markets at the heart of the AI hardware cycle.

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report — including all investment theses, ratings, price targets and conclusions — has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.