ETF Talk: Export-Driven South Korea May Thrive with Global Upturn

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

South Korea did not enter a recession during the global economic crisis of 2008 and it seems likely to outperform in the coming months as the global economic situation improves. If you want to invest in this robust market, then put the iShares MSCI South Korea Capped (EWY) on your watch list.

This non-diversified exchange-traded fund (ETF) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of an index of stocks primarily traded on the Stock Market Division of the Korean Exchange. This fund is focused on the large and mid-cap segments of the Korean market.

Keep in mind that South Korea has an export-oriented economy, so economic growth elsewhere should lift its prospects. As of 2012, South Korea is the sixth-highest exporter in the world. The country’s resilience during the 2008 global economic slump stemmed from internal demand in this high-income, developed economy of more than 50 million people.

While EWY has slipped a bit in 2013, last year’s gain was 3.9%. The yield, for investors interested in additional income, is 0.63%. This yield reflects South Korea’s improving export picture as some of its big trading partners — Japan, the United States, and Europe — are recovering, as well.

EWY 092513

The fund’s top 10 holdings account for 49.54% of its total assets. Of these, the top five are Samsung Electronics Co. Ltd, 21.44%.; Hyundai Motor Co., 6.20%; POSCO, 3.36%; Hyundai Mobis Co., Ltd, 3.21%; and Shinhan Financial Group Co. Ltd., 3.04%. The sectors in which the fund is most heavily invested are information technology, 31.25%; consumer discretionary, 19.15%; financials, 14.27%; industrials, 13.68%; and materials, 10.46%.

South Korea’s high internal demand serves as something of a cushion, but its export-oriented economy is vulnerable to a downturn in Europe or continued anemic growth in the United States and Japan. An additional factor to consider is that hostilities with North Korea are an ever-present danger, as the two countries are officially still at war. However, if you like South Korea as an investment opportunity, you may want to check out iShares MSCI South Korea Capped (EWY).

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to email me by clicking here. You just may see your question answered in a future ETF Talk.

previous article

The Post-Fed Paralysis Last week’s surprise Fed decision to hold off on any “tapering” of its $85-billion-per-month bond-buying scheme caused a lot of dislocation in the financial markets. First there was the big spike higher in stocks, bonds and gold prices immediately following the news. Then just a couple of days later there was some big selling


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Profits Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • Intelligence Report
  • Bullseye Stock Trader

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Technical Traders Alert
  • Success Trading Group

Used by financial advisors and individual investors all over the world, is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor