K-pop ETF Struggles as Korean content hits ‘inflection point’


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In an industry first, the Korea Content Exchange (KoreaCEX) has created an exchange-traded fund (ETF) that allows investors to place bets on the success of Korean pop music. The fund initially looked like it would be popular with investors, but since its launch in April 2016, it has failed to attract much attention. The reasons why are unclear, but the ETF’s creator says Korean content is reaching an ‘inflection point’ in popularity with overseas audiences that could lead to the next K-wave in popularity.

The person who came up with the idea for the new exchange-traded fund, which aims to turn worldwide consumers of Korean media into investment opportunities, is upbeat in his outlook.

The KPOP and Korean entertainment ETF has been trading since its debut on September 1
has not done well; most recently, it was trading at $15.05 on the New York Stock Exchange Arca, down around 23% from its launch. That is consistent with the Kospi index’s total decline of more than 20% this year.

Despite the gloomy forecast for international markets, Jangwon Lee, chief executive of CT Investments and Contents Technologies and the man behind the ETF, is optimistic about the Korean entertainment sector.

Image Source- Lifestyle Asia Hong Kong

ETF for KPOP and Korean entertainment
In an interview with CNBC, Lee stated that “Content consumption, especially digital,” is rather resilient over the long run and in both inflationary and deflationary settings. He also noted that since the fund’s founding, “it’s been a challenging few weeks across all asset classes.”

The stock prices of YG Entertainment and Hybe have declined by almost 26% and more than 64%, respectively, year to date. Overall, Korean entertainment company shares have underperformed.

The KPOP ETF offers “focused exposure to the Korea Exchange-listed firms operating in the entertainment sector and the interactive media & services industry,” according to the company’s website. The fund is a 30-stock index that comprises entertainment businesses that represent the management organisations for bands like BTS, BlackPink, and Twice; these firms are HYBE, YG Entertainment, and SM Entertainment.

Additionally, it consists of content producers like Studio Dragon, who created the popular television series “Crash Landing on You,” and platform providers like AfreecaTV, where some people livestream themselves eating and playing video games.

Given that we are experiencing an inflection moment in K-pop and K-content progressively becoming popular status internationally from what was more of a sub-culture in the past, he added, “We feel it is still in its early stages.”

Pent-up demand
With borders reopening and nations like South Korea and Japan lifting quarantine and testing requirements for tourists, Lee of CT Investments and Contents Technologies predicted that the creative content businesses that this fund makes accessible to international investors will prosper in the long run.

In addition to K-pop musicians purposefully creating new albums in time for the reopening, he said that several artist groups had lately begun their global tours and live performances.

The epidemic, according to financial expert Lee Ki-hoon of Hana Financial Group, demonstrated how the genre profited from its music industry being more “visual idea” focused, as seen by its use of social media.

According to Lee Ki-hoon in an October article, “Its worldwide audience is experiencing a trickle-down impact from groups like BTS and BlackPink, since they were direct benefactors of YouTube – it isn’t restricted by time or region.”

BlackPink’s YouTube account has 82.7 million followers, while one of BTS’s channels, BangtanTV, has 71.5 million.

one who believes strongly and consistently in a faith.
According to Goldman Sachs, the global music business will generate $131 billion in income by 2030, more than twice the $62 billion it generated in 2017. Streaming will also help the sector achieve new heights.

Similar to CT’s Jangwon Lee, he adds that he has “long-term faith” in the prospects of K-pop within the larger business.

According to measurements like social media engagement and retail sales, which include physical record sales, “K-pop fan involvement globally is considerably higher than that of other genres.”

Fans may convert in large numbers to become owners in businesses that are connected to their favourite musicians, he said.

In the near future, Hybe, the organisation behind BTS, may bottom out around December, according to Lee of Hana Financial Group, when the group’s preparations to join in the South Korean military are confirmed.

The agency’s assurance that the band will proceed with its conscription preparations, according to Lee of CT, removes some confusion.

According to Lee, “a sizable overhang has been lifted,” and investors’ attention will now “turn toward other growth potential across the business.”


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