Robust ETF Inflows Amid Geopolitical Risks and Market Volatility in Korea
Despite heightened external volatility stemming from Middle Eastern tensions and a surging exchange rate, Korean retail investors are aggressively purchasing ETFs in the KOSPI and KOSDAQ markets. There has been a pronounced inflow of funds into leveraged and active ETFs, particularly those related to semiconductors and the KOSDAQ, signaling a widespread strategy of bottom-fishing via ETFs. Contributing factors include stock market boosting measures by the Lee Jae-myung administration and increased domestic liquidity, although rising oil prices and ongoing uncertainties in the US financial markets remain key risk factors.
Following recent Israeli and US attacks on Iran, the Korean stock market has experienced sharp volatility, drawing a surge of new investors. Notably, ETF investments through bank trust accounts have also risen significantly, indicating a substantial portion of new capital is flowing into ETFs. Industry leaders suggest that such intense market fluctuations present opportunities for long-term, diversified investment. As the domestic ETF market expands to approximately 400 trillion won, investor responses are becoming increasingly mature. Overall, attractive valuations in the local stock market are combining with investor sentiment that sees volatility as an opportunity, cementing the expansion of ETF-based investment strategies.
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400 trillion KRW ETF as a stock market buffer... Different from past fund concentration - Diagnosis by CEOs of Samsung and Mirae Asset Management - Yonhap InfomaxAmid increased stock market volatility due to recent geopolitical risks, leaders of major domestic asset management companies see the current market scenario as an 'investment opportunity.' Kim Woo-seok, CEO of Samsung Asset Management, advised viewing the current severe volatility as a 'consolidation phase' and an opportunity for long-term, diversified investment. Lee Jun-yong, Vice Chairman of Mirae Asset Management, diagnosed that the domestic ETF market has rapidly grown to a scale of 400 trillion KRW, acting as a buffer against market volatility amid geopolitical adversities. According to the financial investment industry, the two individuals expressed these views at the recently held 'Capital Market Stability and Normalization Summit'.
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