Rapid Growth in the Domestic ETF Market and Key Drivers
Recently, the domestic stock market has been on the rise, with the total net assets of Exchange Traded Funds (ETFs) approaching approximately 355 trillion won. This growth was mainly driven by the Kosdaq 150 index-following products and semiconductor-related ETFs, seeing a rise of over 50 trillion won in the past month. Contributing factors include high exchange rates, substantial fiscal activities, and high performances, with continued growth in the Korean stock market anticipated.
The rise in both the KOSPI and KOSDAQ indices has significantly contributed to the growth of the ETF market. Notably, the Kosdaq index recorded a higher growth rate than the KOSPI index, drawing a considerable amount of individual investors' funds into the Kosdaq market. However, there is an opinion that this growth is more attributed to ETF inflows than corporate performances, suggesting investors need careful selection of stocks.
The government is pushing for the introduction of single stock leverage ETFs as part of its strategy to revitalize the domestic stock market. This is seen as a measure to prevent funds from flowing overseas and is expected to be limited to high-quality large-cap stocks. They will track double the daily volatility of a single stock, making them more suitable for short-term trading rather than long-term holding.
To counteract the risk of investing in 'zombie companies', there are plans to introduce active ETFs into the rapidly growing ETF market. This move aims to address concerns of short-term overheating, accompanied by high PER, and is expected to offer investors safer and more varied options.
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