We see the largest South Korea linked fund EWY (iShares MSCI South Korea Capped, Expense Ratio 0.64%, $3.2 billion in AUM) trading at multi-year highs today on reasonably heavy trading volume yesterday ahead of the election. Other funds in the space which are substantially smaller than EWY that target Korea include the $27 million DBKO (Deutsche MSCI South Korea Hedged Equity, Expense Ratio 0.58%), the $9 million KOR (AdvisorShares KIM Korea Equity, Expense Ratio 0.99%), the $4.6 million FKO (First Trust South Korea AlphaDEX, Expense Ratio 0.80%), and the $1.3 million HEWY (iShares Currency Hedged MSCI South Korea, Expense Ratio 0.64%).
Additionally, there is a levered Bull product in the space (but not a “Bear” one currently) known as KORU (Direxion Daily South Korea Bull 3X Shares, Expense Ratio 1.31%, $5.8 million in AUM). It would not be surprising to see upticks in activity in any of the aforementioned names on this post-election rally in the country’s equity market.
Of course there is an enormous amount of border tension that exists involving South Korea and North Korea, with the United States under a Trump administration increasingly appearing in daily headlines and rhetoric in tandem with this. Thus far however, such tensions clearly have not affected the South Korean equity market, given its blast-off rally here after a small pullback in late March until mid-April.
As we have mentioned in the past, in many ways South Korea is Samsung, and Samsung is South Korea, as the company makes up more than 24% of the market capitalization of the entire South Korean market, and as a result the number one holding in the fund of one hundred eleven names in the portfolio. The next largest company in the index weighs in at only 6.65% (Lotte Confectionery Co Ltd) and is followed by SK Hynix Inc. (4.33%), Hyundai Motor Co. (3.11%), and Naver Corp (3.06%).
As one might expect due to the Samsung overweight, Technology dominates the sector allocations within EWY (36%), followed by Consumer Staples (14%), Financials (14%), Consumer Discretionary (12%), and lesser weightings to other industries.
The iShares MSCI South Korea Index Fund ETF (NYSE:EWY) was trading at $65.93 per share on Tuesday morning, up $0.90 (+1.38%). Year-to-date, EWY has gained 23.88%, versus a 7.25% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.