Growth in Korea's ETF Market and Capital Outflow Concerns
According to the Korea Exchange, the net asset value of the Korean ETF market surpassed KRW 170 trillion in 2024, ranking 11th globally by size and 5th by trading volume. The ETN market has also expanded, with over KRW 16 trillion in indicative value and a total of 412 listed products. Equity and bond ETFs are driving the sector’s growth, and the annual increase in the total indicative value is around KRW 3 trillion, reflecting continued market expansion.
Amid global tensions such as the recent war in the Middle East, concerns have emerged about capital outflows, especially from passive funds. The Bank of Korea, however, stated that the risk of significant capital flight is low, given strengthened economic fundamentals and external soundness. Nonetheless, it emphasized the need to closely monitor potential outflows of high-risk capital during periods of financial stress. While the domestic ETF and ETN markets continue to develop, financial authorities are heightening their vigilance over external risks.
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