ETF Market Posts 2nd Highest Growth
By Park Hyong-ki
Staff Reporter
Korea's exchange trade funds (ETF) traded on the stock market posted the highest growth last year, said the Korea Exchange (KRX).
The ETF market's net assets grew by 55 percent to $2.6 billion _ it ranks second after Singapore globally. Singapore's ETFs grew by 113 percent to $1.8 billion.
Index funds track a basket of liquid stocks. The exchange currently has 21 ETFs on the Seoul market and abroad, up from 12 in 2006.
The KRX attributes the growth to the diversity of ETF products, ranging from index funds tracking stocks both at home and abroad. Last year, it listed two overseas ETFs. The KODEX China H ETF listed on the Seoul market tracks and invests in H shares on the Hong Kong Stock Exchange, while the KODEX200 listed on the Tokyo Stock Exchange tracks the KOSPI200, made up of the country's 200 leading shares, including POSCO and Samsung Electronics.
The exchange also noted that the market's daily trading volume increased 2.3 fold to 53.4 billion won ($57 million) in 2007, making it the most actively ETF-traded market in Asia on a day-to-day basis.
It plans to list additional ETFs that track a pool of socially responsible companies and fundamentally sound firms this year as well as overseas index funds with the aim of listing as many as 50 by 2010 with net assets reaching over 15 trillion won.
Globally, the ETF markets grew by 37 percent to $773.2 billion with a total of 1,137 ETF products.
Japan posted the slowest growth last year, growing a mere 2 percent. The United States remains the biggest market for ETFs with net assets at $550.2 billion, followed by Europe at $134.8 billion.
Foreign investment holdings of ETFs in Korea account for 29.1 percent, up from 7.7 percent, while retail investors' investments decreased by 3.7 percentage points to 14.6 percent as they shifted to investing in equity funds.