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

The creator behind the brand new exchange-traded fund aimed 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 effectively — not too long ago buying and selling on the New York Inventory Change 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 yr.

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 business regardless of the sluggish outlook for international markets.

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

Shares of Korean leisure firms have been underperforming general, with YG Leisure’s inventory value 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 supplies “centered publicity to the Korea Change-listed firms engaged within the leisure business and the interactive media & providers business.” The fund is a 30-stock index, which incorporates leisure firms that handle bands resembling BTS, BlackPink, and Twice — their respective companies being HYBE, YG Leisure, and SM Leisure.

It additionally contains content material makers resembling Studio Dragon, which produced the hit sequence “Crash Touchdown on You” and platform firms resembling AfreecaTV, by means of 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 regularly attaining mainstream standing globally from what was extra a sub-culture prior to now,” 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 run, with borders reopening and international locations resembling South Korea and Japan lifting quarantine and testing guidelines for vacationers.

“There may be vital pent-up demand amongst current 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 means of 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 business will attain $131 billion by 2030 – greater than double the $62 billion for 2017 — including that streaming will enhance the business 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 business.

“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 could possibly be a excessive conversion amongst followers changing 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, might backside out someday round December, when the group’s plans for enlisting in South Korea’s army 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.”