- Journalist Rebecca Sin of Bloomberg reported that K-Pop ETF is a huge failure.
- Launched in 2022, the entertainment ETF tracked 30 companies on the Korean Stock Exchange.
- BTS taking a hiatus and joining the army seems to be the major reason for the failure.
K-Pop ETF is a Kflop, says journalist Rebbeca Sin of Bloomberg. Back in 2020, a K-Pop ETF emerged to channel global funds to the cultural phenomenon. However, even though the ETF began with much hope, it is currently not doing too well, according to reports.
Sin explains that K-Pop bands such as BLACKPINK and BTS typically take over five years from their formation to their official debut. The exchange-traded fund (ETF) that tracks the parent companies follows a similar path from fund inception to success. Introduced in 2022, K-Pop and Korean Entertainment ETF tracks 30 companies listed on the Korean Stock Exchange that deal in entertainment. This includes SM Entertainment, Hybe, Naver, the search engine, and Kakao, the online chat app.
In addition to these large entities, Studio Dragon and Showbox are also part of the list. Studio Dragon is the firm that produced Parasite, the class-critique cinema that won Best Picture at the 2020 Oscars. Parasite also became the first ever foreign language film to win the Oscar for best movie. Additionally, Showbox is one of the producers of Squid Game, a popular show that aired on Netflix in 2021.
Sin elaborates that since its inception, K-Pop has returned 8% with 3 million in assets, which she calls a “not so starry number” dimmed by mainstream markets. This is while S&P 500 returned 15% during the same time frame.
The K-Pop ETF was also significantly affected after the boy band BTS announced an indefinite hiatus in October of 2022 to focus on their individual endeavors and to join the army. News of the young heartthrobs joining the army sent stocks down, while debuts and contract renewals held them up temporarily. The stock rallied as much as 41% but also plummeted 37% on the back of this news. The current hope is the new bands and debuts will help stocks rally again.
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