As the domestic stock market is trapped in a box range, it has been revealed that funds are also flowing out of domestic stock-focused exchange-traded funds (ETFs), which performed well in the first half of the year. There are suggestions to check whether the leading themes of the ETFs are changing.
According to KOSCOM ETF Check on the 2nd, the 'SOL Shipbuilding TOP3 Plus ETF' saw a net outflow of 98.5 billion won during the past week (from August 26 to September 1). As a result, it ranked second in terms of outflows among ETFs. On the previous day (1st), the outflow amount was 26.3 billion won.
This is in stark contrast to the recent influx of funds. This product focuses primarily on HD Korea Shipbuilding & Offshore Engineering, Hanwha Ocean, and Samsung Heavy Industries, which garnered interest from investors.
As shipbuilding stocks rose sharply, the net worth (AUM) of SOL Shipbuilding TOP3 Plus, which was 480 billion won at the end of last year, surpassed 1 trillion won this year. As of that day, the AUM of SOL Shipbuilding TOP3 Plus is 1.4674 trillion won.
ETFs specialized in defense are showing a similar trend. The 'PLUS K Defense' ETF, which had steadily attracted funds since the beginning of the year, saw a slowdown in net fund inflow recently, with a net outflow of 15.3 billion won last week. This is the first time since the shock of the tax reform proposal at the end of July and early August.
This product is also an ETF that has significantly grown due to strong investor sentiment towards defense stocks. The AUM, which was 254.9 billion won at the beginning of the year, has increased to 1.2605 trillion won as of that day. This ETF has also become the first among the ETFs introduced by Hanwha Asset Management to surpass a total net worth of 1 trillion won.
The outflow of net funds from the theme ETFs, which marked good performance in the first half of the year, appears to reflect the state of the market. Although the shipbuilding industry was highlighted by the 'Make American Shipbuilding Great Again' (MASGA) project during the recent South Korea-U.S. summit, it seems unable to overcome concerns about the yellow envelope law (amendment to the labor union law). Recently, the global investment bank JP Morgan evaluated the Korean shipbuilding industry as a sensitive sector to the yellow envelope law.
In the case of the defense industry, recent projections of the possibility of the war between Russia and Ukraine ending have caused a slowdown. Last month, U.S. President Donald Trump met with both Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky.
Recent analyses suggest that the domestic stock market entering a correction phase is also a contributing factor. Park Seung-jin, a researcher at Hana Securities, noted, "The domestic stock market saw a significant influx of funds in the first half due to increased policy momentum, but now we are seeing a decline in confidence again. As the domestic stock market enters a correction phase, there may be profit-taking from ETFs that have generated substantial revenue."
As this year's KOSPI index, which rose significantly in the first half, is trapped in a box range fluctuating between 3100 and 3200, there are suggestions that investors may turn their attention to ETFs that include foreign stocks in the future.
Jeon Gyun, a researcher at Samsung Securities, stated, "Since August, the market has been paying attention to the strong flow of the Chinese and Hong Kong stock markets," adding, "In particular, ETFs focused on innovative technology companies in China have shown stellar performance compared to the CSI30 and HSCEI indices investing in representative Chinese indices."