This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

South Korea ETFs Worth a Look

NEW YORK ( TheStreet) -- As the stability of the U.S. economic recovery continues to remain fragile, investors are turning to international markets to mitigate risk and enhance returns. As for international markets, South Korea is worth a look for good reason.

First, growth in gross domestic product and industrials remains strong and healthy. In the first quarter of 2010, GDP rose by 8.2% when compared to the first quarter of 2009 and recently industrial production rose by nearly 20% from the year before. As for the remainder of the year, this growth is expected to sustain. In fact, the International Monetary Fund recently boosted its growth forecast for 2010 for South Korea to 5.75%, an increase of about 28% from its previous forecasts, buoyed by government led stimulus measures and improving global trade.

A second force adding to South Korea's appeal is its small government. In 2009, public spending accounted for a mere 27% of GDP, the lowest among "rich" economies in the Organization for Economic Cooperation and Development. This trend enables South Korea to keep a tight grip on government debt.

Thirdly, South Korea's close ties with China make its economy attractive. As China's currency increases its flexibility and the yuan's peg to the dollar is eased, South Korean goods become more competitive in the international markets and could bolster demand for exports.

To further add appeal, South Korea's equity markets are valued relatively reasonably, as they are trading at nearly 14.5 times earnings. Lastly, talks about enhanced trade agreements between the U.S. and South Korea could potentially enhance economic activity between the two nations, leaving South Korea the winner.

In a nutshell, South Korea's economy is enjoying sustainable growth, is well-balanced and has positioned itself to be a major economic player. Some ways to play South Korea include:
  • iShares MSCI South Korea(EWY), which has 98 different holdings boasting Samsung Electronics as its top holding.
  • IQ South Korea Small Cap ETF(SKOR), which focuses on small-cap South Korean companies like Kumho Industrial and Daum Communications .
  • PowerShares FTSE RAFI Asia Pacific ex-Jp(PAF), which allocates 33.8% of its assets to South Korea.

Although South Korea remains promising, it is equally important to note its inherent risks and its political differences between North Korea. To help mitigate these risks, the use of an exit strategy which identifies specific price points at which an upward trend could come to an end is of importance. Such a strategy can be found at .

Written by Kevin Grewal in Houston.

At the time of publication, Grewal was long EWY.

Readers Also Like:

Kevin Grewal serves as the editorial director and research analyst at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Additionally, he serves as the editorial director at where he focuses on mitigating risks and implementing exit strategies to preserve equity. Prior to this, Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
EWY $51.51 0.00%
PAF $44.96 0.00%
SKOR $51.56 0.00%
AAPL $95.18 0.00%
FB $117.43 0.00%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs