An exchange-traded fund (ETF) that tracks the KOSPI 200 index will be listed on the Hong Kong stock market for the first time. As overseas investors' interest in the Korean stock market rises amid a recent semiconductor rally, access for Hong Kong investors to the domestic market is expected to improve further.
According to Hong Kong-based asset manager CSOP on the 18th, "CSOP KOSPI 200 ETF (3121.HK)" will be listed on the Hong Kong Exchanges and Clearing (HKEX) that day. The product is the only ETF in the Hong Kong market that tracks the KOSPI 200 index and is the first KOSPI 200 ETF listed in the Asia-Pacific region excluding Korea.
The ETF uses a full-replication method that directly includes the KOSPI 200 constituent stocks. The listing price is 7.8 Hong Kong dollars per share (about 1,500 won), the trading unit is 100 units, and the total expense ratio is 0.99% per year.
The product's investment appeal lies in its semiconductor-centered portfolio. Information technology (IT) accounts for about 66% of the KOSPI 200, and just two stocks—Samsung Electronics and SK hynix—make up about 60%. In addition, SK Square, Samsung Electro-Mechanics, and Hyundai Motor are included among the major holdings.
CSOP cited the semiconductor supercycle driven by expanded artificial intelligence (AI) investment, global capital inflows, and relatively low valuations as reasons behind the strength of the Korean stock market.
In fact, the KOSPI 200 index has posted a gain of more than 130% so far this year. Funds from global investors have also been flowing in steadily. According to CSOP, global ETFs and exchange-traded products (ETPs) with exposure to Korean equities saw a net inflow of $31.89 billion last year, with an additional $30.45 billion flowing in so far this year.
From a valuation perspective, the Korean stock market is still considered undervalued. CSOP analyzed that the KOSPI 200's forward price-earnings ratio (PER) is currently around 9 times, well below the 22 times of the U.S. S&P 500.
Ding Chen, CEO of CSOP, said, "The Korean stock market is growing in importance within global investment portfolios, but it is still not sufficiently known to overseas investors," adding, "The launch of the CSOP KOSPI 200 ETF will be a milestone that enables Hong Kong investors to access the Korean market more easily."
Meanwhile, CSOP has recently been actively expanding its lineup of Korea-related ETFs. It has been rolling out products in quick succession, including single-stock leveraged ETFs based on Samsung Electronics and SK hynix as underlying assets and ETFs related to Korean tech stocks, targeting demand for investing in the Korean stock market.