During the Lunar New Year holiday, the exchange-traded fund (ETF) that tracks the Morgan Stanley Capital International (MSCI) Korea Index, "iShares MSCI South Korea ETF (EWY)," fell by more than 2%. As EWY and the KOSPI index moved in roughly the same direction after the holiday, a bearish outlook is expected after the domestic stock market opens.
According to the financial investment industry on the 30th, EWY closed at $54.42 overnight, up 0.22% ($0.12) from the previous day. Compared to the closing price of $55.9 on the 24th, it decreased by 2.65% ($1.48). The fallout from the plunge of major U.S. tech companies triggered by the Chinese artificial intelligence (AI) startup "DeepSeer" was significant.
EWY was listed in the United States in May 2000. It is the largest ETF that tracks the MSCI Korea Index. The fund's underlying assets include more than 90 stocks, such as Samsung Electronics, SK hynix, KB Financial, Celltrion, Hyundai Motor, NAVER, and Kia.
EWY serves as a compass for analyzing the direction of the Korean stock market after the holiday. From 2022 to 2024, in five out of the six holiday periods during the Lunar New Year and Chuseok, the KOSPI index moved in line with the flow of the MSCI Korea Index ETF on the first trading day after the holiday. Last year, during the Chuseok holiday, the MSCI Korea Index ETF dropped by 0.06% while the KOSPI index rose by 0.21% afterward, but the influence was that both indices remained around the same level.
If EWY does not rebound significantly on the night of this day in the U.S. New York Stock Exchange, it likely indicates that the KOSPI index will show weakness after the opening on the 31st. The U.S. Federal Reserve (Fed) seems to have wrapped up major events for now, as it kept the benchmark interest rate steady, in line with market expectations.
However, EWY does not necessarily align with the direction of individual domestic stocks. The influence of the foreign exchange and bond markets, which were not open while the stock market was closed, should also be considered. A representative from a domestic asset management company noted, "The MSCI Korea Index ETF is largely composed of large corporations," adding, "Considering the variabilities in the exchange rate between the U.S. dollar and the won, bond interest rates, and fluctuations in Asian stock markets, it is advisable to use it to gauge directional trends."