From the 27th, the South Korean stock market will have a four-day long holiday for the Lunar New Year. As the market is set to reopen on the 31st, investors are closely watching trends in the market after the holiday.
Typically, investors check how the U.S. stock market closed overnight to predict the next day's domestic market trends. However, checking this exchange-traded fund (ETF) can be beneficial for developing response strategies. The ETF is the "MSCI South Korea ETF (iShares MSCI South Korea ETF)." Its ticker is "EWY."
Listed in May 2000, the MSCI South Korea ETF tracks the Morgan Stanley Capital International (MSCI) South Korea Index. It has a market capitalization of $3.967 billion (approximately 5.7466 trillion won), making it the largest among Korean index ETFs listed in the U.S.
The MSCI South Korea ETF consists of 95 domestic corporations. It includes major companies such as Samsung Electronics (weighting 21.53%), SK hynix (10.84%), KB Financial (3.14%), Hyundai Motor (2.74%), Celltrion (2.74%), Naver (2.61%), Kia (2.34%), Shinhan Financial Group (2.05%), POSCO Holdings (1.76%), and Samsung Biologics (1.75%).
Over the past year (from Jan. 19, 2024, to Jan. 17, 2025), the correlation coefficient between the MSCI South Korea ETF and the KOSPI index was 0.668. This indicates that generally, when the MSCI South Korea ETF rises, the KOSPI index also increases, and the same pattern occurs in the opposite scenario.
When narrowing the comparison period to the recent three years during the Lunar New Year and Chuseok holidays, there were even more instances of alignment. From 2022 to 2024, out of six instances of the Lunar New Year and Chuseok holiday periods, the KOSPI index followed the flow of the MSCI South Korea ETF on five occasions after the holidays. Only last year's Chuseok holiday saw the MSCI South Korea ETF decrease by 0.06%, while the KOSPI index rose by 0.21%, showing a mixed trend. However, since both were in a stable range, it did not hold significant meaning.
In a situation where the domestic stock market shows significant fluctuations before and after the holiday, the MSCI South Korea ETF can serve as a gauge to understand investor trends during the break.
Of course, since it is not a 100% correlation, it is also important to keep track of individual stock issues. A representative from a domestic asset management company noted, "The MSCI South Korea ETF focuses on large corporations," adding, "With variables such as the won-dollar exchange rate, bond interest rates, and fluctuations in Asian stock markets, it is advisable to use it primarily to anticipate directional trends."