K-pop ETF Wasn’t Doing Well, But Its Creator Says Korean Content Is At An ‘Inflection Point’

K-pop girl group BlackPink performed on The Late Late Show with James Corden airing on Thursday, April 18, 2019 (Photo by Terence Patrick/CBS via Getty Images)

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The creator of the new exchange-traded fund that aims to turn global fans of Korean content into an investment opportunity is optimistic in its premise.

Since its launch on September 1, KPOP and ETF for Korean Entertainment It hasn’t performed well – Arca recently traded on the New York Stock Exchange at $15.05 – which is about 23% down from its start.. This is in line with the overall Kospi index which is down more than 20% this year.

But Jangwon Lee, CEO of CT Investments and Contents Technologies and founder of the ETF, is optimistic about the Korean entertainment industry despite the sluggish outlook for global markets.

“Content consumption, especially digital, is relatively resilient across recessionary and inflationary environments and over the long term,” Lee said in an interview with CNBC, adding that “the past few weeks have been challenging across all asset classes” since the fund’s inception.

Korean entertainment stocks have been underperforming overall, with YG Entertainment’s stock price down around 26% year-to-date, and Hybe down more than 64% year-to-date.

“Ultimately we believe that the fundamental performance of the companies in our ETF will provide further impetus in attracting demand from a wider world of investors,” he said.

We are witnessing an inflection point in K-pop and K-content gradually reaching mainstream status globally than it was more subculture in the past.

Jangwon Lee

CEO of CT Investments

The KPOP ETF says on its website that it provides “focused exposure to Korean-listed companies operating in the entertainment, media and interactive services industries.” The fund is a 30-share index, which includes entertainment companies that operate bands such as BTS, BlackPink and Twice – whose respective agencies are HYBE, YG Entertainment and SM Entertainment.

It also includes content creators like Studio Dragon, which produced the hit series “Crash Landing on You” and platform companies like AfreecaTV, through which some people livestream playing video games and eating.

He said, “We think it’s still in its infancy since we’re seeing an inflection point in K-pop and K-content gradually reaching mainstream globally from what was more of a subculture in the past.”

K-pop girl group Twice of JYP Entertainment at Yes24 Live Hall on April 22, 2019, in Seoul, South Korea. Korean entertainment stocks have generally underperformed.

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pent-up demand

Lee of CT Investments and Contents Technologies said the creative content businesses this fund makes available to global investors will thrive in the long run, as borders reopen and countries like South Korea and Japan lift quarantine rules and test tourists.

“There is a huge pent-up demand among the existing fans, and K-pop artists have deliberately released new albums in time for the reopening,” he said, adding that several artist groups have recently resumed their world tours and concerts.

Financial analyst Lee Ki-hoon at Hana Financial Group said the pandemic has proven that the music genre has benefited from its music business being more oriented towards the “visual concept,” as evidenced by social media.

“Her global fan base is seeing intermittent influence from groups like BTS and BlackPink, who have been direct beneficiaries of YouTube — not just time or location,” Lee Ki-hoon said in an October report.

BangtanTV, one of BTS’s YouTube channels, has 71.5 million subscribers, while BlackPink has 82.7 million subscribers.

BTS performs on stage during the 64th Annual GRAMMY Awards at the MGM Grand Garden Arena on April 3, 2022 in Las Vegas, Nevada.

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Long term insured

Goldman Sachs expects global music industry revenue to reach $131 billion by 2030 – more than double the $62 billion for 2017 – adding that broadcasting will boost the industry to record levels.

CT’s Jangwon Lee is similarly optimistic, adding that he is a “long-term believer” in K-pop’s outlook on the broader industry.

“K-pop fan engagement around the world is higher than other genres across metrics, such as social media engagement and merchandise sales including physical album sales,” Lee said.

“We think there can be a huge turn-around for fans to become shareholders in the companies their favorite artists belong to,” he said.

In the near term, Hana Financial Group’s Lee said Hybe, the group behind BTS, may end sometime around December, when the group’s plans to enlist in the South Korean army are finalized.

Lee of CT said that the agency’s confirmation that the group will move forward with its enlistment plans means removing some of the uncertainty.

“A significant burden has been removed,” Lee said, adding that investors’ focus will now shift toward other growth prospects across its business.

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