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K-Pop ETF Trading 23% Lower Since Debut but Creator Believes Better Days Are Ahead

UTC by Tolu Ajiboye · 3 min read
K-Pop ETF Trading 23% Lower Since Debut but Creator Believes Better Days Are Ahead
Photo: Republic of Korea / Flickr

Jangwon Lee, the creator behind the new K-pop ETF, expects things to pick up eventually despite the lull in Korean entertainment.

Since launching on September 1st this year, K-pop exchange-traded fund (ETF), namely KPOP and Korean Entertainment ETF, has performed poorly. However, the creator behind the scheme remains optimistic about Korean entertainment’s global appeal and outlook. Speaking on the sustained potential of the product, Jangwon Lee, chief executive of CT Investments and Contents Technologies, explained that “content consumption, especially digital, is relatively resilient across recessionary and inflationary environments and longer-term.”

Furthermore, Lee, speaking at a media session, added that all asset classes have faltered since the fund’s inception. Although the K-pop ETF recently traded on the New York Stock Exchange Arca at a 23% drawdown from its debut, Lee stated:

“We ultimately believe that the underlying performance of the companies in our ETF will provide further momentum in attracting demand from a wider investor universe.”

K-pop ETF, Broader Kospi Down Year-to-date

Recently, the stock of Korean entertainment companies has been generally underwhelming, with the overall Kospi index down 20% year-to-date. Other examples of industry players also trading lower are multinational entertainment companies YG Entertainment and Hybe. The former is 26% lower in value since the beginning of the year, while the latter is more than 64% year-to-date.

On why there seems to be a perceived lull in global K-pop traction, Lee posed this argument:

“We are witnessing an inflection point in K-pop and K-content gradually attaining mainstream status globally from what was more a sub-culture in the past.”

In his opinion, we are still in the early stages of the push to convert fans of Korean content across the globe into investors. Additionally, Lee believes that the creative content businesses accessible on the ETF will thrive in the long term. This assertion comes amid countries reopening borders and waiving quarantine rules for tourists in some East Asian nations.

Lee explains that the Covid-related dynamics further whet the appetites of existing fans. As he put it, there is significant pent-up demand among K-pop faithfuls, and artists are also looking to capitalize on this demand. The CT Investments and Contents Technologies CEO pointed out that K-pop artists have also been intentionally releasing new albums. Furthermore, many artists’ groups have resumed concerts and similar events to coincide with the previously-stated reopening of national borders.

According to Goldman Sachs, global music industry revenue will reach $131 billion in the next eight years. This estimate is more than double the $62 billion seen in 2017, and Goldman Sachs sees streaming playing a significant role in the increase.

According to its website, KPOP and Korean Entertainment ETF provides “focused exposure” to entertainment-focused companies listed on the Korean Exchange. In addition, the specialized ETF also caters to the interactive media & services industry.

KPOP and Korean Entertainment ETF

KPOP and Korean Entertainment ETF operates as a 30-stock index which notably includes entertainment management companies behind high-profile K-pop bands. The popular bands, namely BTS, BlackPink, and Twice, and their respective agencies are HYBE, YG Entertainment, and SM Entertainment.

Funds & ETFs, Market News, News
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