By Park Hyong-ki
Staff Reporter
The nation's exchange-traded funds (ETF) market has grown about six-fold since the index-linked funds were first introduced five years ago, the Korea Exchange (KRX) said Monday.
ETFs reached 2.5 trillion won in net asset value as of Sunday, up 595 percent from 355 billion won in October 2002.
Korea's ETF growth rate between December 2002 and August 2007 recorded the second highest at 796 percent in terms of net assets, following Europe's 934 percent, according to data from U.S. securities firm Morgan Stanley.
The number of ETF products also increased to 22 from four over the past five years.
Of 22 ETFs traded on the stock market, Korea's style ETFs, which track and invest in large-cap growth and small-cap value stocks, rank among the top 10 on global exchanges. Korea is the only Asian country with listed style indices.
The American Stock Exchange is the world's biggest trader of these, followed by the New York Stock Exchange and the Deutsche Bourse.
The exchange also outranks its Asian peers as having the most listed ETFs on the stock market. Hong Kong has 19 ETFs; Singapore has 16; and Japan has 13, it said.
According to Morgan Stanley, there are 1,026 ETFs traded on global exchanges, up 266 percent from 2002. The U.S. secures the most with 518 index funds as of August this year.
The country's daily ETF turnover reached 43.1 billion won on average this year, up 31.5 percent from 2002.
Its turnover ratio of 540 percent in the ETF market is the world's second highest after the United States, beating Europe's 348 percent and Hong Kong's 201 percent.
``We expect the number of index funds to hit over 40 with net assets reaching 15 trillion won with Korea becoming Asia's top ETF market by 2010,'' said the KRX in a statement.
The exchange plans to develop a social responsible investment-linked ETF product and additional ETFs tracking and investing in overseas indices in India, Japan, the United States and Europe.