Okay-pop ETF creator says Korean content material is at an ‘inflection level’

Okay-pop lady group BlackPink carried out at The Late Late Present with James Corden airing Thursday, April 18, 2019. (Photograph by Terence Patrick/CBS by way of Getty Pictures)

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The creator behind the brand new exchange-traded fund geared toward changing world 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 effectively — just lately buying and selling on the New York Inventory Change Arca at $15.05 — a roughly 23% drop from its debut. That is in step with the general Kospi index having plummeted greater than 20% this yr.

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Okay-pop ETF creator says Korean content material is at an ‘inflection level’

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However Jangwon Lee, chief govt 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 world 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” for the reason that fund’s inception. 

Shares of Korean leisure corporations 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. 

We’re witnessing an inflection level in Okay-pop and Okay-content steadily attaining mainstream standing globally from what was extra a sub-culture prior to now.

Jangwon Lee

CEO of CT Investments

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

It additionally contains content material makers resembling Studio Dragon, which produced the hit sequence “Crash Touchdown on You” and platform corporations resembling AfreecaTV, via which some livestream themselves enjoying video video games and consuming.

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

Okay-pop lady group Twice of JYP Leisure at Yes24 Stay Corridor on April 22, 2019, in Seoul, South Korea. Shares of Korean leisure corporations have been underperforming total.

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Pent-up demand

Lee of CT Investments and Contents Applied sciences mentioned the artistic content material companies that this fund makes accessible to world buyers will thrive in the long term, with borders reopening and nations resembling 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 just lately resumed their world excursions and concert events.

Why the Korean wave is more than BTS or Blackpink

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 via its social media outreach.

“Its world 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, considered one of BTS’ YouTube channels, has 71.5 million subscribers, whereas BlackPink’s channel has 82.7 million subscribers.

BTS performs onstage through the sixty fourth Annual GRAMMY Awards at MGM Grand Backyard Area on April 3, 2022 in Las Vegas, Nevada.

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‘Lengthy-term believer’

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 enhance the trade to file highs.

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

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

“We consider there might be a excessive conversion amongst followers changing into shareholders in corporations 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 big overhang has been eliminated,” Lee mentioned, including that the main focus of buyers will now “shift towards different development prospects throughout its enterprise.”

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

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