Growth and Challenges in the Korean ETF Market
The South Korean ETF market has expanded to a size of 200 trillion won, driven by a surge in thematic and overseas-based products. Despite the growing product range, investment demand is lagging, leading to the need for addressing the 'zombie ETF' issues through restructuring and reorganization. In the first half of the year, 77 new ETFs were listed, yet there are 57 ETFs with less than 5 billion won in total net assets, causing concerns over low-trading volume ETFs. To respond to this, the Korea Exchange is implementing measures to designate ETFs failing to meet criteria as management targets.
Conversely, the rebound in the domestic stock market in June led to a record-high trading volume in the ETF market. The popularity of domestic equity ETFs surged, raising their share from 57% to 71%, which is reflected in the net purchase by individual investors amounting to 1,399.5 billion won. As political uncertainties subside, market stability is anticipated, and the enthusiasm for ETFs is expected to persist. The rise in ETF trading activity is also contributing to improved liquidity and investor confidence.
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