Korea and Taiwan are both up more than 60% YTD, and short interest has risen with prices — a reversal pattern rather than a momentum one.

Second-quarter data shows short interest leading, with index levels catching up afterward. Recently this pattern has broken down.

In the ETFs, EWY (Korea) shows short covering without a fall in the price. EWT (Taiwan) does not show the same pattern.

Korea and Taiwan are both up more than 60% YTD and are up this month, though Korea remains well below its June peak above 9,000.

Korea’s rise is driven by two stocks, Samsung Electronics and SK Hynix, both of which are AI or AI-adjacent, each carrying close to 25% of the index by weight. Adding the smaller names takes the tech weight to around 65%, but the move is essentially about those two.

Taiwan has only one such stock, TSMC, at around 40%, though the tech weight is around 60%.

Short interest tracks the index level, meaning investors are shorting on the way up and covering on the way down. This is a reversal strategy.

That relationship has broken down more recently, with covering occurring even as the index rises, which is closer to momentum. Short interest has fallen while the index has gained.

In both countries, short interest led in the second quarter, with the index level catching up afterward.

The same covering-without-weakness pattern is visible in EWY (Korea): covering is occurring without the price going down. It is not present in EWT (Taiwan).

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