K-pop ETF creator says Korean content is at an ‘inflection point’

The creator behind the brand new exchange-traded fund geared toward changing international followers of Korean content material into an funding alternative is optimistic in his premise. 

Since its launch on Sept. 1, the KPOP and Korean leisure ETF has not carried out nicely — not too long ago buying and selling on the New York Inventory Trade Arca at $15.05 — a roughly 23% drop from its debut. That is according to the general Kospi index having plummeted greater than 20% this 12 months.

However Jangwon Lee, chief government of CT Investments and Contents Applied sciences and the creator of the ETF, is hopeful in regards to the Korean leisure trade regardless of the sluggish outlook for international markets.

“Content material consumption, particularly digital, is comparatively resilient throughout recessionary and inflationary environments and long term,” mentioned Lee in an interview with CNBC, including that it is “been a tricky few weeks throughout all asset courses” because the fund’s inception. 

Shares of Korean leisure firms have been underperforming total, with YG Leisure’s inventory worth down round 26% year-to-date and Hybe down greater than 64% year-to-date.

“We in the end consider that the underlying efficiency of the businesses in our ETF will present additional momentum in attracting demand from a wider investor universe,” he mentioned. 

The KPOP ETF says on its web site that it gives “centered publicity to the Korea Trade-listed firms engaged within the leisure trade and the interactive media & companies trade.” The fund is a 30-stock index, which incorporates leisure firms that handle bands comparable to BTS, BlackPink, and Twice — their respective businesses being HYBE, YG Leisure, and JYP Leisure.

It additionally consists of content material makers comparable to Studio Dragon, which produced the hit sequence “Crash Touchdown on You” and platform firms comparable to AfreecaTV, by which some livestream themselves taking part in video video games and consuming.

“We consider it’s nonetheless in its early innings on condition that we’re witnessing an inflection level in Okay-pop and Okay-content progressively attaining mainstream standing globally from what was extra a sub-culture previously,” he mentioned.

Lee of CT Investments and Contents Applied sciences mentioned the inventive content material companies that this fund makes accessible to international traders will thrive in the long term, with borders reopening and international locations comparable to South Korea and Japan lifting quarantine and testing guidelines for vacationers.

“There may be vital pent-up demand amongst present followers and Okay-pop artists have been intentionally releasing new albums in time for the reopening,” he mentioned, including that many artist teams have not too long ago resumed their world excursions and concert events.

Monetary analyst Lee Ki-hoon at Hana Monetary Group mentioned the pandemic proved the style benefitted from its music enterprise being extra “visible idea” oriented, as seen by its social media outreach.

“Its international fandom is seeing a trickle-down impact from teams like BTS and BlackPink, as they have been direct beneficiaries of YouTube – it is not restricted by time or location,” Lee Ki-hoon mentioned in an October report.

BangtanTV, certainly one of BTS’ YouTube channels, has 71.5 million subscribers, whereas BlackPink’s channel has 82.7 million subscribers.

Goldman Sachs predicts income from the worldwide music trade will attain $131 billion by 2030 – greater than double the $62 billion for 2017 — including that streaming will increase the trade to document highs.

CT’s Jangwon Lee is equally optimistic, including he’s a “long-term believer” in Okay-pop’s outlook throughout the wider trade.

“Okay-pop fan engagement throughout the globe is materially larger than that of different genres throughout metrics, comparable to social media engagement and merchandise gross sales together with bodily album gross sales,” Lee mentioned.

“We consider there may very well be a excessive conversion amongst followers turning into shareholders in firms that their favourite artists are affiliated with,” he mentioned.

Within the nearer time period, Lee of Hana Monetary Group mentioned that Hybe, the group behind BTS, could backside out someday round December, when the group’s plans for enlisting in South Korea’s navy are finalized.

Lee of CT mentioned the company’s affirmation that the band will transfer ahead with its conscription plans means eliminates some uncertainty.

“A major overhang has been eliminated,” Lee mentioned, including that the main target of traders will now “shift towards different progress prospects throughout its enterprise.”

Correction: JYP Leisure is the company of lady group Twice. An earlier model misstated their affiliation.